CRYPTO INSIGHTS

Leading the digital asset revolution from the frontlines

Patrick Enjalbal spent over two decades advising and managing the successful deployment of institutional-grade financial technology solutions in APAC and beyond. In this blog, he argues that as cryptoassets are inching closer towards the mainstream, this will be the next big space in APAC.
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October 5, 2021

by Patrick Enjalbal, VP Customer Success and Managing Director, APAC at METACO

For those who only have a brushing acquaintance with it, crypto can seem mind-blowingly complicated. But this isn’t strictly true.

Yes, the computers that power the blockchain handle extremely difficult mathematical problems. And that’s the point. The complexity of the maths ensures there’s a sufficiently high bar to obviate the need for human gatekeepers.

But once you understand the basic concept that underpins the technology — the blockchain is a digital, permissionless, trustless, and immutable system of record — it’s very easy to see how it could be applied in everyday settings.

And it’s even easier to get excited by all the possibilities.

Lately, this particular penny cryptocoin seems to be dropping for more and more people. Now that we’re through the hype cycle, a growing number of investors — importantly, this includes institutional investors  — are waking up to crypto’s incredible potential.

As a result, the cryptoasset space is inching closer towards the mainstream. And Asia is shaping up to be the epicenter of this shift. Which is why I’m delighted to have joined METACO as Managing Director, Asia.

In search of stability

I’ve always been interested in finance and how it facilitates business. But I was particularly drawn to banking, because banks have stood the test of time.

Humans have been setting up businesses for over three thousand years. But organizations, industries, and business models come and go. The common thread — the thing every business that has ever existed has in common — is a relationship with a bank.

As a young man, I found this stability and, indeed, longevity very appealing, which led me to want to become a banker.

Then, at the turn of the millennium, digital technology opened up new avenues. And instead of working at a bank as I’d originally planned, I took a job as a banking consultant with a technology company.

From outlier to legitimate asset class: riding the crypto rollercoaster

I spent the next two decades helping banks improve their core infrastructure and create market-leading digital products. But while it never became an area of focus in my job, crypto soon came onto my radar.

At the time, banks were still reeling from the aftermath of the 2008 financial crisis. But crypto was a far less stable proposition. Hackers stole people’s crypto-assets all the time. And their value shot through the roof one day only to go into freefall the next.  

Then, three things happened. The speculative cryptoasset bubble burst, the technology matured, and regulators stepped in.

More secure crypto infrastructure and an increasingly robust regulatory framework — both the US and the EU have passed legislation that addresses grey areas and removes needless hurdles, for instance — are encouraging institutional players to give cryptoassets a go.

Large incumbents like JP Morgan, Goldman Sachs, and Citi have started offering crypto trading and cryptoasset custody services. Similarly, DBS Bank has launched Asia’s first crypto-focused trust.

These initiatives aren’t just attempts at gaining a first-mover advantage. With neo-banks and fintech challengers eating away their main sources of income, the crypto-asset space is potentially a highly profitable new revenue stream.

At the same time, it’s becoming clearer that crypto is a viable industry. The market for tokenized assets is expected to be worth $24 trillion by 2027. But cryptoassets also present a broader opportunity — cutting out middlemen and gatekeepers, and democratizing access to traditionally centralized systems.

These developments are creating a virtuous cycle.

A saner market, better security, and better regulation are increasing institutional interest. In turn, institutional interest is increasing trust in the market, which is giving more people — and firms — the confidence to invest.

The upshot is that we’ve reached a point where we can start building the foundations of a stronger, more stable, more sustainable market. So, when my old boss Andre Israel — somebody I’d enjoyed an extremely fruitful 9-year working relationship with — asked me to lead METACO’s operations in Asia, I didn’t think twice.

Why crypto will go mainstream in Asia first

Cryptoassets are gaining respect as a legitimate asset class across the world. Case in point, JP Morgan is pitching Bitcoin investments to high net worth clients when, barely four years ago, their chairman and CEO was calling such people ‘stupid’.

But Asia — and Singapore in particular — is the region where crypto is closest to reaching critical mass. And here’s why.

For starters, more Singaporeans are familiar with cryptoassets than anywhere else on the planet. According to the Independent Reserve Cryptocurrency Index 2021, 93% have heard of crypto, and almost half —  43% — have crypto-asset holdings. In comparison, only 13% of Americans traded cryptoassets over the past year.

More to the point, Singapore, a world-leading financial hub to begin with, has one of the most mature regulatory frameworks for cryptoassets in the world.

The financial regulator — the Monetary Authority of Singapore — has recently put in place a licensing regime for crypto trading. This is significant, because it legitimizes cryptoassets and puts them on the same level as other mainstream financial instruments.

High standards build trust. And when there’s trust, mass adoption follows.

The golden age of crypto is about to begin

At first it was a scam. Then it was a fad. And then it was supposedly a haven for the unscrupulous and the reckless.

But, 12 years on from Satoshi Nakamoto’s seminal white paper, it looks like we’ve finally turned a corner.

Stronger and clearer regulations, greater familiarity, and growing interest from mainstream financial players have increased cryptoassets’ stability and liquidity, as well as trust in the market.

This is not to say it’s going to be plain-sailing from here on out.

The cryptoasset market is full of promises and possibilities. But it’s also full of pitfalls. For example, having the flexibility to pick different options for different scenarios is essential. The problem is that these decisions can be irreversible, creating silos and fragmentation and adding needless friction to end-users’ experience.

METACO has created a product — Harmonize — that can bring all these moving parts together in one place.

Harmonize sits at the heart of a firm’s crypto ecosystem, so you can manage all customer channels, trading venues, key repositories, custodians, settlement networks, and other components from one place.

More importantly, it offers optionality. Because you can plug and unplug elements of your crypto stack at will, no decision is irreversible. You could store private keys in-house today, for instance, and change tack and start outsourcing them to a third-party custodian a few years down the line.

It’s no longer a question of whether crypto will go mainstream. It’s a question of when. And, particularly in Asia, the ‘when’ is looking more imminent every day.

But if banks and other financial firms are to catch the wave, they need to have the right tools in place to allow them to be flexible, adaptable, and agile.

And I couldn’t be more excited to have joined a company that will help make this happen.

Let's chat about how we can help you seize the digital asset market opportunity

At METACO, we’ve built secure, scalable digital asset infrastructure that makes it simple and straightforward
for financial institutions to store, trade, issue and manage digital assets.

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