Saving Crypto

One can’t help but be appalled to see the former driver of global growth China turn radically inward, preferring a deeply authoritarian economic model.

What they had in the Hu Jin Tao years between 2002 to 2012 was legendary and might not ever happen again.

Friends of mine who have managed to flee China all mention how it was easier to leave before 2020.

Good luck now navigating Chinese lockdowns.

Authorities have made it impossible to leave and they track everything including a digital yuan now.

China and its backward economy have a lot of problems, and the more problems that add up nudge the people to a crypto solution.

I am not saying that every Chinese person will invest in crypto, but for the wealthy ones that usually immigrate to Singapore or Hong Kong, the data backs up my thesis.

KPMG accounting firm has indicated a colossal interest in the crypto market from the wealthy elite of Singapore and Hong Kong.

58% reported investments in crypto game while a further 34% intend to allocate funds to bitcoin, stablecoins, and ether, as well as decentralized finance (DeFi) opportunities.

KPMG only gathered responses from investors whose assets under management ranged between US$10 to $500 million. Of the 58% already invested in crypto:

100% held bitcoin,

87% disclosed ether,

60% bought NFTs and other metaverse tokens,

47% had DeFi tokens.

KPMG found interest in crypto has mainly been driven by prospects of high returns, portfolio diversification, and increased confidence in the market following institutional uptake.

It wasn’t all bullish, though, with respondents stating the industry needs more mature methodologies for valuing crypto, the lack of which has given some investors pause.

Wealthy investors are keen on crypto’s “store of wealth” proposition alongside decentralized finance.

Not to mention, most already invested only allocated 5% of their portfolio to the digital asset class, a figure dampened by uncertainty around regulations and accounting standards.

The good news is that there is a pathway that links rich Chinese to the future of crypto, but it’s largely contingent on if crypto can get its act together or not.

China is ramping up its control over money supply by implementing a digital yuan that they can delete and add to wallets any time they want.

This is really 1984 in its purest form.

As the crypto winter continues, there are indeed some silver linings.

However, crypto needs to be careful that it doesn’t turn into just another centralized version of what the Chinese are running away from.

Decentralization is hard to pull off in the long term as the government will want its cut.

Rome wasn’t built in one day.