What is your view on the impact that DLT and Blockchain is having in reshaping asset and wealth management? What is the current state of the space and how do you foresee it moving forward?
Despite the volatility of crypto markets in 2021, the crypto industry as a whole has been performing positively. Every year, we observe an increase in the number of private investment funds looking to capitalize on the rising market returns of the crypto industry. According to Kraken Intelligence, the assets under management (AUM) of private crypto investment funds increased from US$36.25 billion in January 2021 to US$59.6 billion in October 2021, an increase of 64.4%. It is also noted that much of this jump from AUM year-to-year was due to legacy financial institutions and investors investing directly in crypto assets and crypto funds.

According to Nickel Digital Asset Management research, 91% of institutional investors think that the prevalence of crypto assets is increasing day by day. Similarly, Fidelity Digital Assets Study of 2021 states that 84% of High Net Worth Individuals (HNWIs) in Europe and 86% in Asia currently buy / invest in Digital Assets. This demand from HNWIs and market developments are steering players in the wealth management space to consider and adopt crypto asset solutions to their offerings. Investment professionals now have a more positive view on Digital Assets, with a vast majority indicating that they are becoming more mainstream. Despite holding a small percentage of asset allocation, crypto investments not only provide strong returns and diversification benefits, but also enable protection from inflationary pressures and resulting monetary policy implications.

However, anxiety still remains, especially due to the risky and volatile nature of cryptos, pending government regulations, and security concerns. Anticipated regulations are also keeping wealth managers on edge, as prohibitive measures would have a serious impact on their clients’ holdings. And yet, the recent rejection by

the EU Committee of the proposal to ban PoW Networks is a strong indication that the EU Parliament will not impose prohibitive measures on the growth of Digital Assets in the region.

Even with current uncertainties about crypto markets, it would be safe to say that Digital Assets are here to stay, and institutions need to cater to these developments in order to stay ahead of the game. There is a current need to integrate wealth managers’ platforms such that it runs as a unified engine for a seamless experience. In this regard, it is critical that wealth managers integrate crypto solutions in such a way that it results in a comprehensive platform delivering real-time data and advanced portfolio analytics.

As the crypto markets are still young, and yet developing at lightning speed, there also seems to be confusion and indecisiveness amongst wealth managers in terms of how these developments can be addressed, and how a crypto offering can be incorporated. Institutions, most commonly the larger ones, are either committing considerable resources to develop their own platforms or opting to collaborate with solution providers. The pace with which wealth managers and asset managers move is important, as a considerable number of HNWIs already have or plan to have holdings of crypto assets. It is therefore necessary that their holdings are incorporated into their current traditional asset portfolios, so that the wealth manager and client have a more comprehensive idea of overall investments, and the associated levels of risk.

Furthermore, in order to retain their clients and better serve them, wealth managers need to be proactive in their crypto offering and provide innovative solutions, where the client is better informed about crypto markets and opportunities are detected. In an extremely competitive market, effective crypto solutions may enable wealth managers and asset managers to gain a significant competitive advantage that may not only result in increased assets under management from existing clients, but also from the onboarding of new HNWIs.

What solutions does your company offer that asset and wealth management firms should consider?
CryptoIndexSeries offers wealth and asset management firms simple to integrate solutions that allow the effective incorporation of crypto market data, trading venues and portfolio analytics tools. This provides institutions a timely and encompassing solution for the crypto markets, without having to commit considerable time and resources themselves.

There are mainly three offerings: the CIS API, the CIS Portfolio Analytics and the CIS Trader.

The CIS API product delivers institutional-grade, AI- driven data, as well as trading and portfolio API for Crypto Markets. The CIS API is unique in that it enables a bundled access for data, trading and portfolio analytics.

CIS API provides access to our Unified Web API and websocket services through these components:

• CIS RealTime API
  Provides access to normalised exchange, aggregated and index data over our real time websocket service.

• CIS Data API
  Provides access to news, reference data, timeseries data and searchable content.

• CIS Trading API
  Enables wealth and asset managers to control access / connectivity to clients’ exchange accounts or prime broker accounts. They can also submit and manage orders across multiple exchanges and partnered prime brokers through a single, unified API.

• CIS Portfolios API
  Allows to automatically collect transactions for all connected client accounts and create, manage and monitor portfolios using offline and connected exchange accounts.

Figure 8: CryptoIndexSeries Portfolio Analytics Engine

The CIS API also enables asset managers to access low- latency financial data, time-series data, a rich news feed, sector and market indices that are invaluable tools in their decision-making process. Access to various trading exchanges and prime brokers from just one platform is also possible, which enables fast and timely trades for those HNW clients that make larger investments or prefer to churn their crypto portfolio often.

The CIS Portfolio Analytics product provides institutions with a simple, easy-to-integrate and customizable service for Advanced Portfolio Analytics.

This product takes transaction data or balance snapshots as an input and carries out the following tasks and more:

• Cross-references asset and instrument information
• Aggregates raw transaction data and balancesnapshots
• Values given portfolios across 24+ fiat and cryptocurrencies
• Calculates balance histories
• Generates performance calculations, analytics and
• asset allocation data and analysis.

This product is extremely customizable in that institutions can:

• Configure for assets and instruments their platform supports
• Configure for 3rd party pricing / valuation sources,
• Use their own pricing feed or leverage CryptoIndexSeries’ vast Digital Asset Valuation & Pricing service
• Utilize white label views that can be easily integrated

Both CIS API and CIS Portfolio Analytics can be integrated into the wealth manager’s or asset manager’s platform to retrieve their clients’ crypto holdings, value portfolios, carry out advanced portfolio analytics or help create virtual crypto portfolios for those clients that are interested but not yet invested. This allows a more holistic view of the clients’ total investments.

Finally, the CIS Trader product is a web application providing data analytics, access to multiple exchanges and prime brokers to send buy/sell orders as well as basic portfolio views for the connected accounts. This front-end tool is specifically useful for asset managers as a unified platform for data analysis, trading and portfolio management.

In addition to our product range for wealth and asset managers, we provide data and index calculation services to index issuers and crypto fun

Finally, CryptoIndexSeries has well-established partners in the Crypto ecosystem such as:

• Custodians
• Prime Brokers
• Exchanges
• Crypto Tax Reporting providers

Some of our partners provide us preferred rates for their services which institutions can benefit by working with us.

Figure 9: CryptoIndexSeries’ business lines

This article is from The Wealth Mosaic's WealthTech Views Report: DLT & Blockchain 2022. Access the full report here