“Where there is a will and need, there is a path for mass adoption.”

Thomas Campione, CFA, Blockchain & crypto-assets Leader, PwC Luxembourg, at the LHoFT’s ‘Cryptomania’ Digital Event

The bubble hasn’t burst yet, but so many years after cryptocurrencies made their debut, they still haven’t unleashed the miraculous potential they promised to. However, in time, crypto assets went from being esoteric dark web material to mainstream topics of conversation and enthusiasm. Indeed, in economically unstable countries, it is possible to witness cryptocurrencies becoming Silicon Valley-made pagan icons as they cushion against inflation and government surveillance.

Most resources revert to the Financial Crisis of 2008 to highlight the rise of Bitcoin & co. However, it wasn’t until COVID19 the price volatility turned into a massive spike. As the lockdown increased interest for personal finance and digital advisory, the WealthTech industry was forced to lower the barriers to enable active wealth management for everyone. “The Global WealthTech Investment Trend Overview” by FinTech Global speaks for itself.

What’s the connection to cryptocurrencies, you might ask? Clearly, the economic turmoil and the shift in institutional trust highlighted BTC and other cryptocurrencies as a viable wealth preservation channel.

“From an institutional standpoint, we witness more demand and traction from the financial services industry for crypto as an investment vehicle.”

JB Graftieaux, Managing Director Europe at Bitstamp, at the LHoFT’s ‘Cryptomania’ Digital Event

After the first wave of lockdowns, BTC prices jumped from lower four-digits to five-digits. As the lockdown fueled digitization for financial service providers, the eased access to the stock market and the positive media coverage increased customer familiarity.

The data from blockchain.com reveals that the total estimated value of daily transactions on the blockchain jumped from millions to billions after March 2020, indicating an increase in cryptocurrency use cases and acceptance. It was only a matter of time that the FinTech players rose to the occasion and took steps to increase cryptocurrency accessibility and make it more mainstream.

“The adoption of cryptocurrencies as a payment method is already there. Banks should start accepting it gradually.”

Rikiya Masuda, Managing Director, Europe at bitFlyer from the LHoFT’s ‘Cryptomania’ Digital Event

The Luxembourg perspective:

“With distributed ledger technologies and cryptocurrencies here to stay, since 2014 Luxembourg has shown its capacity to innovate in the sphere of fintech. We firmly believe that Luxembourg will also become an EU hub for regulated token offerings in the future.”

Jean-Louis Schiltz, Senior Partner at Schiltz & Schiltz SA, and
Nadia Manzari, Partner at Schiltz & Schiltz SA
The Virtual Currency Regulation Review: Luxembourg (2021)

“There are opportunities arising, but these are only possible if we ensure the protection of investors. Noting the interest from investors, the investment fund industry – extensive in Luxembourg – must look into cryptocurrencies and define new strategies taking into account this new type of investment (cryptocurrency or digital asset).”

Emilie Allaert, Project Lead at Luxembourg Blockchain Lab

Does the increase in performance and demand mean that crypto exchanges, the initial one-stop crypto shops, are heading towards the roof? Let’s take a look, studying the challenges ahead.

At LHoFT, we are of the view that actors in the financial sector are presented with a significant opportunity to leverage trust services in order to drive digitalisation and automation at large within their organisation. The fulsome implementation of electronic signature (eSig) solutions and their potential integration with electronic identity (eID) has the potential to enshrine lasting gains in efficiency and transparency all the while leading to an improved customer experience.

The present white paper has ambitions to be thought provoking as well as pragmatic. It presents readers with a discussion of:

• The critical attributes of modern trust services
• Their regulatory backbone in the EU
• An overview of relevant solutions providers

This document seeks to help decision makers in financial services consider their strategy to upgrade and modernise their processes in order to meet evolving client needs and drive their satisfaction while lowering costs and improving overall efficiency.

DOWNLOAD

EXECUTIVE SUMMARY

1. Electronic signatures represent a natural evolution of the way individuals and institutions enter into written agreements, however adoption by financial institutions has been slow due to perceived complexity and lack of consistency across the EU relative to investment requirements.
2. Near-universal adoption of computers and mobile devices, combined with shifting customer preferences and the reality of cross-border business, make the adoption of eSignatures and associated services, such as remote onboarding, inevitable, and first movers are likely to gain competitive advantage through enhanced customer onboarding and data analysis.
3. The EU-level legal framework under eIDAS, international standardisation of technical aspects and the availability of regulated service providers means that there are few, if any, real obstacles to a transition towards electronic signing and electronic archiving in the financial sector.
4. A 2015 Luxembourg law on electronic archiving, in conjunction with eIDAS, presents an additional opportunity for Luxembourg businesses to gain a competitive edge.
5. Portable/reusable eID would allow for the elimination of redundancies and for more seamless cross-border business in the EU internal market. A proposed update of eIDAS, published in June 2021, addresses this unmet need.