Bitcoin, Ethereum and other cryptocurrencies have been a much-discussed topic among institutional and retail investors, with some already looking ahead to retirement and succession planning for their digital assets.
BnkToTheFuture, a Cayman Islands-incorporated crypto investing platform, has partnered with U.K.-based crypto lending platform Celsius and First Digital Trust, a Hong Kong-regulated trust and custodian specializing in digital assets, to launch today a retirement plan for investors seeking to incorporate cryptocurrencies as a part of their investment portfolios and inheritance planning.
Investors will be able to buy, lend and invest in Bitcoin, Ethereum, stablecoins as well as shares in crypto companies as part of their retirement plan, according to a company statement. The plan is now open for pre-registration and to selected investors, and will be available worldwide in early Q4 2021 on BnkToTheFuture’s platform.
There has been significant interest in investing in crypto through retirement plans, said Simon Dixon, CEO and co-founder of BnkToTheFuture in a statement. BnkToTheFuture’s platform also facilitates investments into funding rounds of crypto companies such as Coinbase, Circle and Ripple Labs as well as Celsius and First Digital Trust.
As investors seek to diversify their investment portfolios, crypto retirement plans are emerging as a new trend. In June, retirement investment platform ForUsAll said that it was partnering with Coinbase, the largest cryptocurrency exchange in the United States, to offer exposure to cryptocurrencies through its Alt 401(k) investment platform.
“It’s great to facilitate more options for BnkToTheFuture investors so they can receive yield on their investments,” said Alex Mashinsky, CEO of Celsius, said in a statement. “ To offer these options to those building retirement plans is completely in line with our mission to grow blockchain-based finance and bring the next 100 million people into crypto.”
For First Digital Trust, “it was a very good, natural progression for us to go from the traditional retirement type of plans to dealing with digital assets,” Vincent Chok, CEO of First Digital Trust (FDT), told Forkast.News in an interview. FDT, which completed its last funding round on BnkTotheFuture, is the platform’s custody partner. Last year, BnkToTheFuture moved its clients’ crypto and fiat currency assets to First Digital Trust, where unlike a traditional banking relationship, the funds cannot be used by the custodian to make investments.
“Traditional types of retirement plans are not really generating the yield that can actually allow someone to retire these days,” Chok said. “It’s about creating more options for people.”
Structuring digital assets retirement plans involve a fair amount of complexity given the differing regulations as well as reporting and tax obligations across jurisdictions, Chok said. “With institutionals getting involved in the space, there’s more control, there’s more regulations, and we are all for that, as well as making sure that underwriters and products are structured properly so that when it comes to reporting and taxation, everything is done correctly.”
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Chok is very bullish on the tokenization of real-world assets, such as real estate, and said FDT had also tokenized artworks that the company holds in custody for its clients. “Where we feel the future is,” Chok said, “is clients can invest and hold tokens that are backed by traditional assets that are very secure and safe.”
For example, a commercial building that generates a high rental return could be tokenized for a digital assets retirement plan, with the ownership of the building and rental income held via tokens and smart contracts through the plan instead of physical units in the building or equity, Chok said.
Going forward, Chok sees the opportunity for smaller companies with employees in different parts of the world to set up digital assets retirement plans, with over 50% in cost savings compared to a traditional retirement plan due to the use of blockchain technology.
Chok sees the trend of digital assets adoption as one that’s here to stay. “We’ve seen big institutions invest heavily into the digital assets space as well as trust companies like ourselves adopting blockchain as a way of replacing the old fashioned type of trusts,” said Chok, adding that “the way of doing things in retirement and in the trust business is something that hasn’t changed in hundreds of years.”
“We want to give more credibility to the digital assets industry and we will want to work with the best. There’s a lot of people from the regulated world jumping into the digital assets space. You have professionals and experts that have huge experience in finance, regulations, taxation, all working towards helping people in this space create a product that people could feel comfortable with.” Chok said. “So a lot of the doubters now could probably be less doubtful.”