How Blockchain Wealth Management Is Affecting The Current Financial System

The world of finance is rapidly changing

Blockchain wealth management creates a whole world of fresh opportunities (and challenges) to the finance sector

Banks have already adopted Blockchain Technology

No longer in the realms of scams and money laundering, crypto digital assets like Bitcoin, security tokens, blockchain-enabled payments and decentralised finance are here to stay.

Major banks across the world and here in Australia have already adopted blockchain technology for payment transfer, increased security and instant money transfers: the next generation of the internet is emerging.

Wealth and risk management has broadened over these past years as new financial instruments have emerged.

The emergence of blockchain wealth management creates a whole world of fresh opportunities (and challenges) to the finance sector.

The wealth management industry needs to ensure it’s working ahead of the changes, not only to remain competitive, but up-to-date and relevant. Clients are already looking to their wealth advisors to help navigate these new and intriguing digital financial instruments, and understand the implications for their investments.

When financial markets crash, especially in the aftermath of Covid-19 devastation to businesses and jobs, and there’s a downturn in the financial markets, people start to seek other safer assets. Traditionally, these have been property, stocks and precious metals.

Now we can add another very competitive player to that list: digital crypto assets.

Banks and financial institutions are able to improve their customer service by upskilling staff so they understand these new currencies, and can serve their clients much better.

What will the impact be on existing financial infrastructures of blockchain wealth management, and how will it affect finance and money as we know it?

Banks across the world are not only using blockchain technology backend to power transactions, but also, starting with news laws being passed in Europe, are now purchasing, holding and selling cryptocurrencies for their customers…

German Banks Authorized to Store and Sell Cryptocurrency in 2020

European Parliament Directive 2015/849

According to the regional financial news publication Handelsblatt, in 2020 banking institutions from Germany will be able to manage cryptocurrencies for customers. Under newly enacted legislation, banks in Germany will be able to receive, store, and sell digital assets like bitcoin cash (BCH) and ethereum (ETH). Directive 2015/849 is an amended regulatory approach that was issued by the European Parliament and German politicians.

Bitcoin Is Treated As Money In The Context Of Money Transmission Licensing In D.C.

Money Transmitters Act Washington D.C.

More than 40 central banks worldwide are experimenting with blockchain technology.

World Economic Forum

ANZ Bank, Westpac and Commonwealth Bank have formed a new company, Lygon, that will digitise bank guarantees using blockchain technology, eliminating fraud and slicing the time it takes tenants and landlords to agree on commercial leases.

Lygon ANZ Bank, Westpac, Commonwealth Bank, Scentre Group, IBM

1. Crypto Market Cap Exceeds The Size Of Large Australian Banks

As of writing Sept 15 2020, the crypto market has a market cap $347.726B USD

One of the largest banks in Australia, the Commonwealth Bank, has a market cap as of today of $85.61B USD

Market caps of the other Big 4 Australian banks on the same date:

ANZ

$32.48B

Westpac

$44.72B

NAB

$42.11B

2. Decentralisation

In addition, with the decentralisation (no middle man) of cryptocurrency, it means we may no longer need to rely on third parties like banking institutions to make our everyday transactions, large or small.

3. Financial Industry Employment Downturn

Another factor is that as crypto digital assets ripple across the world financial markets, there is a huge possibility that many current employees in banks and other institutions in this legacy industry will lose their jobs.

Upskilling and being equipped and empowered for the massive financial changes upon us all means you’ll be sought after as one who knows more than his/her peers, re-inventing your role in a modern relevant context.

4. Security Tokens Digitising Paper Work

Security tokens is all about reducing admin costs and digitising paper work for investing in equity, giving you more liquidity while still maintaining company performance.

You can create tokens instead of being burdened with administration, and if a company performs, then the value of the token is going up – security tokens can be backed by financial instruments.

5. How We Buy Properties Is Changing

Asset tokenisation, especially in regards to the real estate sector, is starting to see some revolutionary shifts from the old lending system through banks and financiers to introducing blockchain technology so that land titles may be fragmented, ownership deeds apportioned into individual units, available for purchase publicly online. Tokens are issued to identify ownership.

We already have projects of this nature being developed in Europe and USA. In Australia we don’t yet have access to tokenising actual buildings, though there are workarounds using security tokens to apportion funds for properties.

We can also see tokenisation affecting other asset classes like precious metals, luxury items ownership and more.

6. Massive Changes Afoot Within The Finance Market

With these massive changes afoot within the finance market – from extreme money printing leading to extreme inflation, and with that a collapse of our monetary system (including how we pay for our properties), it’s time for a reset, an update.

It’s time to commit to learning about the future of money.

Join us on this fascinating dive into how this will affect our lives and what it could look like for those mindful thinkers that are educated in advance and empowered to act.

–> Blockchain for Wealth and Risk Management

2 x 1/2 day professional training in Perth. Click here for details

In summary, there are three main areas within wealth management that are destined to be uprooted by the introduction of disruptive blockchain wealth management technology:

Client onboarding (KYC – Know Your Customer)
Instant money settlements
Automated investment vehicles using smart contracts.

Cryptocurrencies and security tokens also present new investment opportunities – bringing further disruption to our current financial market infrastructures.

Wealth managers, financial advisors, banking industry professionals, corporate/ business professionals, real estate professionals and property finance specialists wanting to stay current and relevant in their roles will greatly benefit from having a basic understanding of blockchain technology, crypto digital assets, DeFi and asset tokenisation (real estate included).