CrescoFin helps wealth managers offer their clients an innovative, asset-backed investment alternative.

CrescoFin has designed insured deposit opportunities at higher rates than a bank deposit. Current pricing: USD 3.00%, EUR 1.50%, CHF 1.00% pa (net).

• Enabled by blockchain technology.
• Insured through the Lloyd’s market.
• Redeemable with 30 days’ notice.
• Interest paid every 30 days.
• Regulated in Switzerland.

Thought leader
Annoyed with low returns on their savings, old friends and business partners Robert Sharratt and Derek Mayne created CrescoFin for their own use. Their objective was to make their money work harder for them. By combining decentralized finance, blockchain technology and insurance, they created a low risk, attractive return alternative to a bank savings account. Robert, who is Managing Director at CrescoFin, holds a Master’s degree in Finance from London Business School, has a background in banking, and writes about how blockchain can change the finance industry for the better.

Q&A with Robert Sharratt

How is DLT and Blockchain reshaping wealth and asset management? Where is the industry today and how do you foresee things changing in the future?
Wealth management, like the rest of finance, is principally about risk and return. This is how blockchain technology products should be evaluated.

Background
Blockchain is essentially a system of record-keeping that enhances trust. There are broadly two types of record-keeping architectures:

Traditional databases. There is one main record book, which is held inside a firm. The firm controls the database. You trust your money to the firm because of its reputation, or because it is regulated, or because other people seem to trust them, or for similar reasons.

Blockchain databases. There are several record books, all of which update simultaneously, and which the wealth manager can see in a transparent manner. The firm no longer controls the database; records are available to stakeholders who have access rights and cannot be changed without approval. You trust your money to the firm because you can see what they can see.

The invention of blockchain brings light to a previous financial world that lived in darkness.

In the past, a firm might say “don’t be evil.” Blockchain changes this to “can’t be evil.”

Risk
Blockchain will completely reshape the wealth management industry’s management of risk. Transparency will become the norm for financial products.

Now
Traditional databases rely on people doing the right thing. However, scandals from Bernie Madoff to Ruvercap to Wirecard show that in-house records can be manipulated. Wealth managers and their clients are often the losers. Can’t find several billion in missing funds? Well, if you had a blockchain-based record book, you’d know where the money is.

Future
In the future, before investing in many products, a smart wealth manager will ask: is the financial information available on a blockchain? Meaning: can I see the record book, so I can verify what you are telling me?

Returns
The implications of blockchain are spectacular: you can now trust exchanging value with another person or institution directly, even if you don’t know them. This means that you don’t need to go through a central authority (like a bank or an exchange). It also means that the costs of the central authority can be cut out, and the savings can be shared with users.

Now
Most blockchain uses today focus on back office efficiencies. Most products are purely in the “crypto” space and don’t connect to the real economy. As with the development of the internet, we have seen this story before. Wealth managers need to prepare for a decentralized future that will radically change finance forever.

Future
Wealth managers who want to deliver greater returns to their clients need to become more accustomed to dealing with counterparties and financial products directly, without going through central authorities. The transition will take time, but expect clients to insist on it.

Who cares?
Forward-thinking wealth managers should get up-to speed on blockchain technology for selfish reasons: because it will help their business. Blockchain offers the possibility to reduce risk and increase return for clients. If you don’t do it, a competitor will.

You don’t need to understand cryptography to appreciate blockchain, just like you don’t need to understand TCP/IP to watch Netflix. I find the best way to stay informed is to read Efi Pylarinou’s newsletters and to watch Ivanontech in the mornings.

Trends
Blockchain technology will lead to two clear trends:

1. The future will be a lot more transparent than the past.

2. The financial services industry will become a lot more decentralized.

The implication for wealth managers is very positive: you (and the client) will have a lot more power, at the expense of currently centralized entities like banks and exchanges.

What solution(s) does your company offer that wealth and asset management firms should consider?
The last decade has seen a quiet war on savers. Interest rates have been low and bank deposits pay little. The foreseeable future will be no different.

Returns on the cash element of a client’s portfolio are very low across a $60.5 trillion deposit market. And banks, the dominant players, are unable to give clients what they need.

CrescoFin has a simple solution, made possible by blockchain technology. We cut out the bank middleman and connect deposits to short-term productive uses in the real economy.

When a depositor places their money, they get secure title (a certificate of deposit) to the principal + interest as well as the associated insurance cover. The funds are used to purchase receivables to be paid by major companies, most of which are investment-grade. The receivables are generated through a transparent blockchain solution, which reduces disputes and fraud. As a result, we obtain insurance at attractive rates, which minimizes the risk of non-payment and increases the returns for the clients. We only finance receivables related to insured debtors.

What the client gets is an insured short-term placement, similar to a bank savings account. Title and personalized insurance cover information is recorded on the depositor blockchain (designed by us and hosted by Oracle Corp.). The client can see in real-time where their money is being put to work, on a transparent and temper-proof distributed ledger. Our product is designed to be bankruptcy-remote from the company itself. We pay the insurance premiums and the depositors are the beneficiaries (the Loss Payees) of the insurance policy.

In a nutshell, we do what technology companies do best: unlocking value in inefficient, high-margin businesses. Essentially, we function like a bank, but in a decentralized manner so users earn the returns that would have gone to a bank.

By applying the benefits of our model to any insurable asset and risk-proofing it with insurance, we give depositors access to a solution to negative rates and insufficient deposit guarantee coverage. And there is no reason for them to miss out on other opportunities that may arise in the short term, since depositors can redeem their deposit at any time, with 30 days’ notice.

CrescoFin’s solution has been in use since October 2019, paying insured returns to depositors every 30 days.

Our clients have the peace of mind of investing through a company that is based, audited and regulated in Switzerland.

Product details:
Perpetual Redeemable Insured 1% CHF Notes ISIN: CH0558513468

Perpetual Redeemable Insured 1.5% EUR Notes ISIN: CH0558513476

Perpetual Redeemable Insured 3% USD Notes ISIN: CH0558513484

These are the first ever blockchain-based wealth management products to be quoted on the Bloomberg terminal.

We welcome HNWIs, family offices, private banks and wealth managers who want to make their money work harder for them with a safe, transparent, and ESG-focused solution.

Clients can also benefit from the products in a regulated fund structure. CrescoFin serves clients worldwide.

ACCESS THE FULL WEALTHTECH VIEWS DLT & BLOCKCHAIN REPORT HERE