This joint report with Elevandi and the Monetary Authority of Singapore reflects on the digital assets and Web3 discussions, key trends, and uses cases discussed at the Singapore FinTech Festival 2022 (SFF2022).
SFF2022’s theme of Building Resilient Business Models amid Volatility and Change was incredibly pertinent to the digital assets ecosystem, which has experienced both the macroeconomic pressures felt in traditional markets, and a series of large-scale, idiosyncratic challenges that continue to rock the industry.
Whilst discussions and topics varied considerably over the course of the festival, this report provides a snapshot of industry sentiment across SFF2022 participants. It focuses on the opportunities, challenges, and the path ahead, with a particular focus on institutional adoption and recent developments bridging financial and Web3 ecosystems.
Oliver Wyman hosted the Digital Assets and Web3 Knowledge Plenary, roundtable sessions at the Elevandi Insights Forum, and was a sponsor of SFF2022.
Below is a summary of our report, for the full version, please click the PDF below.
Digital assets and Web3 were a core theme of SFF2022, and a pervasive topic throughout the festival. Industry leaders were energised by the promise of increased financial inclusion, cost and efficiency benefits that would flow through to consumers, the economic benefit of reduced friction for cross-border payments, and the possibility for new products and services enabled by the programmability, composability, and efficiency of digital assets.
Perhaps most exciting was the extent to which crypto-natives, institutions, and regulators were coming together and looking to collaborate to navigate the risks inherent in the ecosystem, establish the guardrails needed to stabilise the ecosystem without stifling innovation, and realise the potential benefits to ecosystem participants and the financial services industry.
The recent and ongoing market turmoil was well acknowledged, but many made the distinction amongst business, reduced investor enthusiasm and cryptocurrency valuations, and the infrastructure and opportunities arising in the wider digital asset ecosystem. The speakers touched on the poly-crises experienced over the past six months and the contagion that spread as valuations collapsed, along with the liquidity and solvency challenges striking major Web3 players.
The discussions turned to what it takes for participants to remain viable and thrive under these conditions. Furthermore, there was discussion on the potential benefit of cleaning out the unsustainable business models, discouraging excessively risky behaviours, and exposing vulnerabilities. Together, these actions could accelerate the maturing of the industry, by helping regulatory attention focus on where it is most needed and promote infrastructure development rather than speculative investing.
We see a bifurcation in crypto-natives. There are those reliant on speculative value or traded volumes, who are at a difficult spot in their funding cycle or haven’t hedged their balance sheets; these firms are struggling. But, there are those building infrastructure, launching projects with utility value, have raised capital, and are currently diversifying their revenue streams; they are benefitting. They are not focused on their next airdrop, or what their Discord followers are saying - they are building with a longer-term visionJames Gordon, Partner and Asia Pacific Digital Assets Lead, Oliver Wyman
Outlook
With market volatility and regulation still in flux, the digital assets and Web3 ecosystem is at an inflection point, with many holding different views as to how the industry will evolve. From a gradual adoption of the underlying technology by retail, we are now seeing the explicit signs of a transformation of how the financial system works.
Regardless, ecosystem participants will have to navigate industry-specific and macro-economic challenges. Continued volatility of crypto assets, shifting value pools, and a tighter funding environment will make the clarity of value proposition, customer utility, and role in the ecosystem increasingly important.
With increasing institutional adoption, regulatory clarity, and technological progress, the long-term role of digital assets and Web3 in the financial services industry will be both significant and potentially revolutionary in terms of its impact.