How the wealthy manages their crypto assets

Thursday, March 18, 2021
crypto assets

How the wealthy manages their crypto assets

The crypto space has seen an influx of large investors, from a few millions to billions of dollars in investment flowing into the crypto world. More than 500 billion entered the digital asset space in the past 8 months with a significant portion coming from institutional investors and high NetWorth individuals. But how exactly do these whales manage their exposure to crypto assets? The short answer, they invest in ways to secure their asset or, they distribute it to professionals who can manage it for them.

Here are 3 main ways in which they do so:

#3 Using Over-the-counter services for placing trades

Since these investors buy and sell massive amounts in crypto at once they tend to opt for an over-the-counter (OTC) solution. OTC solutions are ideal in this situation as it allows the investor to reduce the price slippage, while also managing their impact on the market—this prevents the market from dumping or pumping based on the liquidity on a market. Many crypto exchanges offer this OTC service but such investors lean towards licensed or regulated exchanges to mitigate the usual risks involved in an OTC deal.

#2 Leveraging regulated custodians

Another popular way the wealthy manage their assets is to put it in custody of regulated and compliant crypto custodians such as SMART VALOR. Through a custodian, individuals benefit from top-of-the-line security infrastructure used by banks to protect funds. While it’s not necessarily the same thing, a custodian is an alternative to burying your crypto underground. Using a custodian means that the individual is also protected by the law, based on where the custodian is registered. Additionally, custodians sometimes offer insurance to add an additional layer of peace of mind.

#1 Putting it to work with a wealth manager

Many wealthy crypto holders chose the path of least resistance when it comes to compounding their wealth. Using wealth managers, investors give their funds to professionals to put it to work for them. The investor can select their risk tolerance and then wealth managers decide the best strategy for deploying the funds. Wealth managers also act somewhat like a custodian as in they have the infrastructure to safeguard the funds while it's being put to work.

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