The financial world is changing at breathtaking speed. Crypto wealth - and the people who create and hold it - are no longer seen as a niche category outside the traditional banking system. Increasingly, they're becoming part of mainstream wealth management.
At banks, debate has raged around whether (and then, how) to welcome these newly wealthy crypto-owning customers in order to enable new business growth, while remaining responsible, compliant and risk-free. By working together with RegTech specialists Cense, one innovative Dutch wealth manager has set about showing how it can be done.
Across the Netherlands and beyond, leading private bank and wealth adviser Van Lanschot Kempen has a pioneering track record stretching back centuries. According to its Denis van Beetz, Senior Private Banker and Crypto Lead for the private bank, this approach is embedded in its DNA. 'We've been around since 1737,' he says, 'so we embrace change as new asset classes evolve... to us, it's about innovation plus due diligence.'
The wealth manager has recognised that many crypto owners are legitimate entrepreneurs, investors and long-term wealth builders looking for trusted banking relationships.
'There are two sides to our client story. The first is around crypto natives who are diversifying their assets, selling their crypto and moving into private banking. They are getting older and want to realise their assets to build security... and it's also practical to spread their risk,' adds Van Beetz.
'The second group are traditional private banking clients who can now buy and hold crypto ETFs, either in Bitcoin or Ethereum, as an entry point into digital assets.'
'We wanted to enter the market to help our clients, and to onboard the crypto natives while reassuring the regulator that they are legitimate wealth holder. Because the blockchain is transparent, there can be 100% certainty about the origins of their crypto wealth.'
Now, by working with Cense and investing in a more sophisticated onboarding process for clients with crypto assets, Van Lanschot Kempen is combining innovation with regulatory responsibility to position itself as a true frontrunner in the sector.
Today, Cense works in close collaboration with the Wealth Management and Compliance specialists at Van Lanschot Kempen to give them a definitive, 360-degree view of their prospective clients' digital assets, across any crypto exchange in any jurisdiction. Armed with this information, which comes as an accessible report, the private bank can form a clear 'go/no-go' decision to accept the client, or escalate the case for deeper investigation.
Michiel Hoogenboom, Chief Commercial Officer at Cense says that as well as reducing the sheer volume of effort and paperwork required by the bank and its crypto customers, the benefit of deep client knowledge and insight boosts trust at every level.
'If you're a crypto owner, you can be assured that Van Lanschot Kempen knows you and trusts you, thanks to Cense. As a banking innovator, they can help you to explain and tell the story of your wealth... in this sense, they understand you and are on your side', he says.
Why did Van Lanschot Kempen choose Cense as its strategic enabler and trusted compliance partner? For Denis van Beetz it's a combination of product and people: 'Their solution is strong, the team is easy to work with, and they move quickly on innovation.'
'You can use one of the 'big four', but that takes time. Cense has the advantage of being quicker and more cost effective as well as trusted and legitimate. It's easy to embed Cense technology in the compliance process. And from the client perspective, it's also anonymous - Cense only sees client crypto data, not personal information.'
'There has been an emotional change in the market, from 'prove that you're a legitimate wealth owner' to 'you are very welcome'. Because we see the person, not just the numbers, our crypto clients can now talk about their wealth with confidence and confidentiality.'
Looking to the near future, Van Beetz wants to translate his institution's progressive approach into a flow of new business, delivered in a secure, scalable and compliant way. 'We are looking to onboard as many new clients as we can,' he says, 'but the Cense report is just one part of the process. We still insist on a face-to-face meeting.'
'If the Cense report shows no abnormal activity, we can open an account within two weeks, subject to the usual background checks. Before Cense, the same process would have taken over 12 weeks, if the client could provide all the required information about their crypto wallets and holdings.'
Further ahead, Denis predicts greater convergence between traditional and digital assets as crypto tech and products are integrated deeper into conventional finance. Stablecoins, for instance, are more readily understood by banks and can be integrated more easily into their offering. In the shorter run, crypto RegTech from specialists such as Cense can help transform internal efficiency at banks, as well as reducing the compliance burden endured by their customers.
Right now, Van Beetz's message to crypto owners is clear: 'There has been an emotional change in the market, from 'prove that you're a legitimate wealth owner' to 'you are very welcome'. Now we want to help connect the new crypto wealthy with our wealth management network, from family offices to tax lawyers and even art dealers. So now there is no need to hide - you can diversify away from crypto with confidence.'
Denis van Beetz is Senior Private Banker and Crypto Lead, at Van Lanschot Kempen.
Michiel Hoogenboom is Chief Commercial Officer at Cense.