ABRDN (formerly known as Standard Life Aberdeen), one of the largest investment companies in the UK, has indicated that it is considering the possibility of trading in cryptocurrencies in the future. Alternatives Chief, Kevin Thompson, stated that ABRDN is closely monitoring the digital asset market and may take steps towards integration in the next stage of the company’s development.
This announcement from ABRDN marks yet another shift in the perception and adoption of cryptocurrencies by mainstream financial firms. Many traditional companies have previously been known to avoid trading in digital assets due to its volatile nature and the lack of regulations in some jurisdictions.
However, the increased interest in cryptocurrencies in recent years, especially after Bitcoin’s explosive price rally in late 2017, has led many to reconsider investing in the sector. Consequently, ABRDN is the latest firm to indicate that it is reviewing the possibilities of trading in Bitcoin, Ethereum, and other digital assets.
While ABRDN is still in the early stages of examining cryptocurrencies, the firm is not a stranger to innovative investment products. The company has recently launched several successful ETFs, and CEO Stephen Bird said that there would likely be a considerable investment in ESG (Environmental, Social, and Governance) products.
“We are seeing significant demand for our products globally; we expect to see more opportunities to offer our customers ESG products in the future,” said Bird.
He further noted that ABRDN’s move to trading in cryptocurrencies would depend on its regulatory status and the associated risks. “We want to ensure that our customers’ investments are secure, and we will only move into a new investment product after we have taken all these factors into account.”
The cryptocurrency market has seen tremendous growth over the last year, with Bitcoin alone increasing from around $7,000 a year ago to over $50,000 in May 2021. As digital assets continue to gain acceptance, many industry analysts predict that cryptocurrencies will be increasingly adopted by mainstream financial institutions.
While there may be opportunities for large firms like ABRDN to reap significant profits from trading in cryptocurrencies, it’s essential to note that the sector is still somewhat misunderstood and relatively unregulated in some markets.
Furthermore, it is common for digital assets to experience significant price volatility, with some cryptocurrencies losing more than 80% of their value within a few months. Consequently, investors should approach the sector with caution, seeking expert advice and conducting significant research before investing in any cryptocurrency.
In conclusion, ABRDN has expressed its intentions to consider trading in cryptocurrencies. While there are still several factors to consider before investing, including regulatory status and potential risks, this move underlines the growing acceptance of digital assets by mainstream financial institutions.
Asset manager Abrdn has indicated that it may trade cryptocurrencies like bitcoin at some point in the future as it continues its work in tokenisation and digital securities. Russell Barlow, head of alternatives for the FTSE 100 asset management firm, said at the City Week conference in London on 25 April, “Would we consider trading crypto? I’d be foolish to say no.” The comments came as Abrdn confirmed its status as the largest external shareholder in digital assets firm Archax, which provides institutional investors with access to digital assets via its custody service. However, Barlow suggested Abrdn sees greater potential in the tokenisation of existing assets such as stocks and bonds. He argued, “Where we see the opportunity is in the adoption of digital securities as the next evolution along the structure.”
Despite Barlow’s suggestion that Abrdn may in future trade cryptocurrencies, the UK at present is still running a consultation on how to regulate digital assets, and firms such as Abrdn have previously indicated that they are unwilling to trade in such securities without proper regulation in place. By contrast, the EU has now passed regulations that will apply to crypto assets in a move that is likely to put pressure on regulators in the UK and US. Abrdn previously indicated that fund tokenisation is currently viewed as the most promising application of the technology by the firm, with Archax CEO Graham Rodford commenting that while they may be willing to “embrace the technology across the organisation,” in the current climate fund tokenisation was the “thing that everyone is talking about.”
The development comes amid continued growth in the cryptocurrency market, as demand continues to rise from individual and corporate investors. It reflects a shift in emphasis towards cryptocurrencies among asset managers, many of whom were previously hesitant to invest in or trade such assets, in light of a lack of regulation and volatility in the prices of cryptocurrencies. However, as greater regulatory clarity is established around cryptocurrencies, as well as wider recognition of the role they can play in relation to broader digital securities markets, it appears that asset managers are becoming more comfortable trading in these emerging assets.
As crypto becomes more widely accepted, it is likely that other asset managers will follow Abrdn’s lead and seek to incorporate bitcoin and other cryptocurrencies into their trading activities. This in turn could lead to even greater mainstream adoption of cryptocurrency, establishing it firmly as a serious alternative asset class to traditional securities. Regardless of the immediate outcome of the UK consultation on how to regulate digital assets, cryptocurrencies are set to remain a significant and growing part of the financial landscape for years to come, and it seems that an increasing number of asset managers are now embracing this reality.