Leveraging Institutional Digital Asset Infrastructure for Private Wealth Clients

Read more in a recent article on Hubbis.

13 September, 2024: Founded in 2017 with backing from the Victor Smorgon Group, one of Australia’s most prominent family offices, Zerocap has quickly established itself as a leader in the digital asset space. Predominantly focused on providing international liquidity and institutional services, Zerocap offers a full range of tailored digital asset services for private wealth clients, including over-the-counter (OTC) trading, structured products, staking, lending, and institutional-grade custody. Zerocap’s technology-driven platform and its team of experts uniquely position the company to serve high-net-worth individuals and family offices globally. Bharti Sharma, Zerocap’s head of global expansion for private wealth clients, recently shared insights on the company’s growth and strategy during an interview.

Zerocap’s Global Reach and Expanding Client Base 

Zerocap’s global footprint extends well beyond its Australian origins. Bharti Sharma explained that the company has built a solid international client base, with significant representation in regions like the UK, Europe, the UAE, and Singapore. Zerocap is also pursuing Type 4 and Type 9 licenses in Hong Kong, which will further boost its ability to cater to clients across Asia.

Reflecting on Zerocap’s client relationships, Bharti stated, “Zerocap’s focus on both private wealth and institutional markets is supported by its regulated setup, infrastructure and global outreach. Positioning the firm as a versatile player in the rapidly evolving and borderless digital assets ecosystem.” She emphasized the importance of blending cutting-edge technology with a uniquely Australian client-focused approach, which includes delivering services with a sense of humor. “This culture of delivering excellence with a hint of humour spills into all our dealings with clients, ensuring that even under pressure, clients get a chance to have a bit of a chuckle and laugh alongside us. That really defines our client relationships.”

Key Trends Driving Private Wealth Adoption of Digital Assets

Bharti outlined key trends shaping the interest of private wealth clients in digital assets. She has identified two main client types: early adopters and multi-generational family offices. The early adopters have accumulated wealth through digital asset investments over several market cycles and have a deep understanding of the technology. These clients are typically comfortable with the market’s volatility and seek both direct exposure to major cryptocurrencies and smaller, technology-driven projects.

On the other hand, family offices, particularly second and third-generation investors, are newer to the digital asset space but are integrating it into their broader alternative investment portfolios. Commenting on the increasing legitimacy of digital assets, Bharti noted, “Interest in digital assets is broadly driven by how and when these clients began viewing the asset class as investable. For many, the backdrop of growing legitimacy of digital assets—signalled by the rollout of Bitcoin and Ethereum ETFs—has been crucial. Over the past year, the introduction of ETFs has really provided a stamp of approval from the institutional market, enhancing credibility and encouraging more private wealth clients to explore digital assets.”

Bharti also observed that “overall, interest in digital assets within the private wealth sector has shifted from niche enthusiasm to broader acceptance, driven by both the legitimisation of the asset class and the desire for alternative investments that align with technological advances and market evolution.”

Structured Products and Customized Strategies for Digital Asset Exposure Zerocap’s ability to offer customized solutions is one of its greatest strengths. For those with a wholesale license, who have high levels of conviction and experience of digital assets, usually early adopters, the firm provides sophisticated investment strategies to manage risk. These clients often utilize structured products to hedge downside risks while maintaining exposure to potential gains. “They might opt, for example, to cap the downside risk on certain assets, while still participating in potential upside at a capped level,” Bharti explained. Zerocap’s services are tailored to meet each client’s specific needs, whether it’s adjusting risk levels or providing yield management services through staking.

For multi-generational family offices, the approach is more conservative. These clients typically start with structured products, using accumulation strategies for major assets like Bitcoin, Ethereum, and Solana. Over time, they may diversify into spot exposure, but tend to avoid smaller, high-volatility assets. “They are relatively new to digital assets and often start with structured products as an accumulation strategy for the majors like Bitcoin, Ethereum, and Solana, by having an entry or exit position at predefined levels to earn yield until their strike price is hit,” Bharti explained.

Both client types, however, share a common view on the role of Bitcoin as a hedge against inflation. “The one common theme across both types of clients is the conviction in Bitcoin as a hedge against inflation and store of wealth, particularly in the current macroeconomic climate,” Bharti added.

The Importance of Insured Custody Solutions

Since 2020, Zerocap has partnered with Fireblocks, a leading digital asset custody provider, to safeguard client assets and one of their first Global Custodian Partners. Fireblocks’ platform is renowned for its robust security features, including multi-party computation (MPC) technology, which ensures secure transactions. Zerocap’s partnership with Fireblocks, and its unique insurance by Lloyd’s of London reflects its commitment to providing robust custody solutions, particularly critical for private wealth clients who may be uncomfortable leaving assets on exchanges or managing self-custody.

“For all clients alike, our insured custody solution is also extremely compelling, given the level of distrust the broader ecosystem has with leaving assets on exchange or the fact that self-custodying can be overwhelming for clients,” Bharti explained. She also highlighted the unique requirements of private wealth clients when it comes to governance, security, and succession planning, noting that Zerocap’s custody solutions are tailored to meet these specific needs.

Global Market Expansion and Regulatory Developments

As Zerocap expands globally, the regulatory landscape plays an increasingly critical role. While Australia is still in the early stages of providing regulatory clarity on digital assets, other markets, such as the UAE, have made significant strides. Bharti pointed to the regulatory frameworks established by the Abu Dhabi Global Market (ADGM) and Dubai’s Virtual Asset Regulatory Authority (VARA), which have created more certainty for investors and private wealth clients. “The UAE really is emerging as a leading hub for digital assets, not just because of these regulations but also because it advocates for innovation and has created a playground for founders to grow and learn in,” Bharti commented.

As regulatory clarity improves across key markets, Bharti believes that broader adoption of digital assets will accelerate. “As more regions around the world develop clear regulatory frameworks, the convergence of regulation, innovation, and global capital flows will continue to accelerate the broader adoption of digital assets, making them an even more integral part of the financial landscape,” she predicted.

Final Thoughts

Zerocap’s ability to leverage institutional infrastructure while meeting the bespoke needs of private wealth clients, with genuine human connections, sets it apart in the digital asset space. As Bharti Sharma summarized, “The convergence of factors such as institutional endorsement, regulatory clarity in key markets, and technological innovation like tokenisation is rapidly transforming digital assets from speculative investments into a key part of alternative asset allocations.” Zerocap’s commitment to bridging the gap between traditional finance and digital assets ensures that it remains at the forefront of this evolving industry.

Disclaimer

This article includes a summary of content originally published in Hubbis. The information is intended for informational purposes only. Zerocap does not endorse or approve any specific content or viewpoints contained in the original articles.

Zerocap are not regulated by ASIC. Zerocap Pty Ltd is registered with AUSTRAC as a Digital Currency Exchange (DCE) service provider (DCE100635539-001) and is a Corporate Authorised Representative (CAR: 001289130) under an ASIC regulated licensee (AFSL 340799) to serve financial products and services.

www.zerocap.com