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«We are witnessing a mixed financial ecosystem»
The future success of traditional financial institutions and new emerging fintech companies is not mutually exclusive. Indeed, according to Deng Chao, CEO of HashKey Capital, in a conversation with finews.asia, there is a growing trend towards a “mixed financial ecosystem”.
Contemporary advocates of decentralized finance (DeFi) often see the promise of reducing friction and the elimination of traditional financial institutions such as brokers, exchanges, or banks. Cryptocurrencies are a great example with many tokens capable of allowing custody and transfer without the use of intermediaries.
But in an interview with finews.asia, Deng ChaoThe Executive Chairman of HashKey Singapore and CEO of HashKey Capital, stressed that traditional financial institutions continue to be relevant.
Crypto ETFs
In the case of cryptocurrencies, conventional tools and channels are already being used, demonstrating a fusion between traditional finance and that of the future.
“Our recent launch of spot ETFs for Bitcoin and Ethereum is a perfect example,” Deng said of the passive vehicle created in collaboration with Chinese asset manager Bosera, which debuted trading in late April. «Investors can now connect their digital assets directly to the existing financial system, choosing to invest in these ETFs with digital assets or fiat. This has never happened before.”
Custody needs
In terms of holding cryptocurrencies, many tout the benefits of self-custody via cold wallet as the safest means, but others may still prefer to compromise for greater convenience, including institutional investors, some of whom hold significant assets with security needs. staking, for example – staking, yields and other DeFi opportunities.
“We need a nuanced approach that balances the principles of self-sovereignty of cryptocurrencies with the realities of everyday life: we value convenience and simplicity, which are not usually two traits the cryptocurrency industry is known for,” he noted Deng.
«Serving the current moment»
In addition to ETFs, HashKey Singapore is currently developing a suite of other services to meet customer needs. They include specialist wealth advisory services to help build customized strategies for accredited investors, family offices and institutions. The company is also enhancing its offering for professional and institutional investors by expanding the number of spot token offerings with greater liquidity coverage.
“Finance has always been about finding products that serve the current moment, and we are already seeing this change happen in real time,” Deng added. «We are seeing the emergence of a mixed financial ecosystem that takes the best of “traditional” finance and combines it with the best of cryptocurrencies.»
Regulatory standards
Furthermore, a purely DeFi world can also create risks for unfamiliar users who might otherwise be protected by laws and regulations. At a fintech conference organized by «Money 20/20» in April, Deng spoke on a panel about the different speeds of adoption in different markets due to regulatory, technological and cultural disparities, as well as the need to develop clear legal and ethical standards for regulate its use.
«While cryptocurrencies themselves are borderless, regulations are not. And this is not exclusive to digital currencies. We all have to operate within the frameworks provided by our respective geographies, which creates a complex landscape for any financial institution,” Deng added.