"Do you accept crypto?" - Demystifying cryptocurrency in yacht transactions
According to a recent survey, what percentage of millennial millionaires own cryptocurrency?
According to a recent study conducted by CNBC, 83% percent of millennial millionaires own cryptocurrency with over half having at least 50% of their wealth in cryptocurrencies.
Questions answered during the webinar
1. What is the difference between cryptocurrency and fiat currency? [4:35]
- Fiat currency is the currency issued by a government, not backed by a commodity (e.g. gold), like sterling.
- Its value is determined by confidence in and the stability of the issuing government.
- Cryptocurrency is a digital asset that derives value from confidence in the decentralised technology sitting behind the cryptocurrency, a blockchain.
- Fiat currency requires a “middle man” to facilitate exchange (a bank, for example), whereas crypto payments can be made directly and cross-border, often making them cheaper and faster.
2. What could a yacht broker do now to prepare for a crypto future? [8:47]
- Cryptocurrency represents a huge opportunity for businesses in the yachting industry and beyond.
- Awareness and understanding are key – many organisations offer free courses to help understand the basics of cryptocurrency, NFTs and blockchain technology.
- Only UK businesses who are handling cryptocurrency need to register with the FCA.
- There are many third-party organisations who can facilitate payments and perform AML / KYC checks on cryptocurrency.
- Accepting crypto payments for goods or services is perfectly doable, but people can be deterred by the volatility (e.g. Tesla).
3. If a broker was interested in cryptocurrency, should they accept it themselves or use a third-party? [11:23]
- The current risk of doing it yourself is high, especially if you’re new to the market with no prior knowledge. Thus, it’s better to use a trusted third party. This is the more appropriate way to deal in cryptocurrency for most businesses.
- Look at who the third party is underpinned by; have you heard of them? What jurisdiction? Are they backed by reputable companies?
- The user journey for crypto transactions can be just as simple with the right help.
4. How long do you think before cryptocurrency becomes more prevalent in the luxury asset space? [16:34]
- Global luxury market will reach 1.5 trillion dollars by 2025. 50% of this market will be millennials.
- It’s difficult to judge what will happen in this space, but we’ve already seen luxury brands investing more and for different applications e.g. NFTs for protection against counterfeiting.
- In 2021, 73% of crypto owners were millennials.
- Millennials drive 85% of luxury sales growth.
- Art market have been taking the lead when it comes to crypto in the luxury asset space, with the yacht/marine market lagging behind.
5. If funds are immediately converted to sterling, is this not “crypto-washing”? [19:25]
- People are dabbling with the sector, which is a good thing regardless of whether they are converting the currency after a transaction.
- Accepting currency in crypto is no different to accepting euros and exchanging to sterling.
- Why create a barrier in a potential sales opportunity, especially if your target demographic is so heavily weighted towards crypto assets?
6. How can a broker be assured that the cryptocurrency it accepts is clean and secure? [22:29]
- How can you do this with fiat currency? Substantially more fiat currency is laundered and use in illicit activity compared to cryptocurrency.
- There are many screening tools and companies that help risk score crypto transactions and screen the direct sender.
7. What kind of uptake do you foresee in the luxury asset market and as a payment method generally? [25:12]
- Questions to ask before considering cryptocurrency are - does it fit with your demographic? Is volatility too much of a hassle for you?
- A study by Deloitte predicted that 75% of retailers will accept crypto in the next two years.
How many attendees think businesses should accept crypto as a payment method?
90% of attendees indicated that businesses should accept cryptocurrency as a payment method.
Questions from attendees that we didn’t have time for
8. What does the payment journey look like for a client paying in crypto?
For most businesses, using a third-party payment service will be like accepting any foreign currency. The third-party will accept the cryptocurrency and convert it to the receiver’s native currency. As with foreign currencies, it might be that the exact price is fixed close to payment to ensure no parties are adversely affected by price fluctuations.
9. Should a broker have crypto reserves?
Unless a broker is handling cryptocurrency directly, this is almost certainly unnecessary and could potentially leave a business exposed to price fluctuations.
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