A tripartite partnership of companies, with interests in the UAE and wider Middle Eastern digital asset market, have come together to address what it believes are significant shortcomings in inheritance planning.
The three companies – UAE-based startup and ‘innovation hub’ DIFC Innovation Hub, Swiss wealth manager Julius Baer and Belgian financial services firm Euroclear – aim to address problems in the regional ‘digital asset estate planning space’.
Digital assets, such as cryptocurrencies but also blockchain-backed assets and solutions, have been growing in production, ownership and usage at an exponential rate in recent years.
As a centre of regional and global business and finance, the UAE has become a key area of development and commercial interest for various firms. The country is also one of many to be probing the possibility of launching a Central Bank Digital Currency (CBDC), showing authorities interest in engaging the space.
However, the DIFC-Baer-Euroclear alliance believes a problem exists in that over AED 3.67trn (US$ 1trn) in assets will be transferred to a new generation in the Middle East ‘over the coming decade’, but only 24% of the region’s high-net worth individuals have a full estate plan.
Mohammad Alblooshi, CEP of DIFC Innovation Hub, said: “The region is witnessing a trend of generational wealth being deployed across a variety of digital asset classes to diversify and future-proof their portfolios.
“By bringing together global leading entities across wealth management, financial services providers, tech disruptors and regulators, this newly launched innovation project will help transform one of the largest, underserved markets in the region and open doors to a more inclusive and tech enabled future for family businesses and the wealth management industry.”
The triple partnership aims to coordinate engagement between ‘innovators, investors and subject matter experts’ in wealth management to see how technology can be used to manage tokenised and digital asset portfolios.
The partnership plans to begin with a three-month review culminating in a White Paper suggesting a ‘future-oriented solution’ for multi-generation inheritance of tokenised and digital assets.
Alireza Valizadeh, CEO, Julius Baer (Middle East) Ltd, remarked: “Generational wealth transfer is gaining momentum in the UAE, and we, as Julius Baer, are in a unique position to advise our clients having had our origins as a family business.
“On the occasion of Julius Baer’s 20-year anniversary in Dubai, I am hoping that this innovation project will showcase how we can work together to stay relevant to our future clients and provide a vision highlighting the evolution of the private banking industry especially with the onset of digital assets.”
The three companies added that, once the joint-White Paper is published, an additional hope is that the analysis and findings will ‘serve as a blueprint’ for other geographies looking to address similar challenges.
As it stands, the global crypto market alone – and associated holdings – is valued at over $1.65trn. In the US, the sector received a significant boost in recent weeks when the Securities and Exchange Commission (SEC) approved Bitcoin ETFs, opening the world’s largest crypto coin up to a wider pool of prospective investors.
“As a trusted financial market infrastructure we have a strong commitment to collaborate with the market providing innovative solutions to our clients,” said Philippe Laurensy, Head of Group Strategy, Product Management and Innovation at Euroclear.
“We are extremely pleased to be working with DIFC Innovation Hub and Julius Baer on what we see as a transformative journey to address market gaps and create efficiencies by harnessing the power of tokenisation.
“By validating and unlocking the benefits of smart contracts we have the potential to redefine the narrative of wealth management, creating solutions that could span generations.”