ADDX, a private market digital exchange, announced on Wednesday that it will recognize cryptocurrency holdings when evaluating the assets of prospective clients.
The move is anticipated to assist more individuals, including crypto investors, qualify as authorized investors, allowing them to invest in private markets via ADDX.
These investments, which include private equity and venture capital funds, hedge funds, and pre-IPO companies, are now limited to accredited investors only.
In accordance with Singaporean legislation, accredited investors must have at least $300,000 in annual income, $1 million in net financial assets, or $2 million in net personal assets.
In the category of net personal assets, ADDX will accept crypto assets.
As part of its procedure for validating accredited investors, it will use a 50% discount rate when determining the value of Bitcoin or Ether holdings, and a 10% discount rate when calculating the value of USDC stablecoin holdings.
The three coins and their respective discount rates will be evaluated at regular intervals and may be modified as market conditions evolve.
To qualify as accredited investors on ADDX, individuals must demonstrate that the value of their net personal assets, including crypto assets with the discount rate applied, exceeds $2 million.
Choo Oi-Yee, chief executive officer of ADDX, stated that it is fair to include crypto assets in one's portfolio, given that an increasing number of investors currently possess crypto.
As a result of this shift, the exchange anticipates registering a considerable number of investors, particularly younger ones.
"Because crypto investors tend to be younger and have worked for a shorter period of time, they are less likely to have accumulated wealth in traditional assets," Choo explained.
This new move could be crucial for them to cross the $2 million threshold and become authorized investors.
The changes reflect a rising acceptance of cryptocurrencies as a new asset class and come at a time when authorities are allocating more resources to monitor and regulate the sector.
According to a global poll conducted by Gemini in 2021, cryptocurrency ownership increased by more than 80%.
In Singapore, homeownership rates have reached 30%. After halving from its peak in November 2021, the total market capitalization of cryptocurrencies remains at US$1.2 trillion (S$1.6 trillion).
"Cryptocurrencies will continue to exist. They are no longer on the periphery of wealth and investment discussions," said Choo.