Thriving in the era of digital assets
Digital assets, powered by blockchain technology, have the potential to reshape the very fundamentals of how the asset management, alternative investment and banking industries operate. Digital assets can uncover opportunities, enable disintermediation, increase liquidity, and streamline both data and reconciliation.
Blockchain technology has disruptive elements along the entire value chain. Processes can be made leaner thanks to the automation of activities. Those currently performed with the involvement of intermediaries, such as settlement and clearing, are currently complex, time-consuming, and inefficient. Using blockchain as an underlying technology standard promises to bring disintermediation, shorter transaction times, greater transaction security and lower costs thanks to a single source of truth.
The global market has realized that the innovative force of digital assets will permanently change the financial industry. Increased regulatory certainty will also lead to greater investment in the necessary infrastructure and in market entry. European banks and asset managers will have to explore their own strategic market position and new innovative players will enter the market.
The largest Digital Assets team in Luxembourg
With more than 30 professionals dedicated to digital assets, our team is at the forefront of financial technologies and can assist you in navigating the complexities surrounding these products. KPMG is a leader in this space, disrupting the professional services market through strategic partnerships that allow us to build end-to-end solutions. Our professionals provide advisory, tax and audit services across the ecosystem of digital assets, from asset managers to asset servicers as well as financial institutions and family offices.
A message from our Head of Alternative Investments
Embark in the digital assets revolution.
At KPMG, we believe that digital assets powered by blockchain are the foundations of a new financial infrastructure. The capacity of these technologies to create disintermediation and economies of scale should be an important vector of growth of the Alternative Investments industry.
Christophe Diricks, Head of Alternative Investments, KPMG Luxembourg
Want further insights?
We understand your digital asset and blockchain challenges
- Digital assets are complex from a conceptual and regulatory perspective. In addition, regulations surrounding digital assets are constantly evolving. This makes it difficult to adopt a result-driven approach.
- Though you may see digital assets and blockchain as the next disruptive financial technology, you may not fully know to what extent they would benefit your business and how they would transform your business model.
- Implementing blockchain technology may lead to a decrease in costs and increase your firm’s competitive advantages. However, this transformation requires high investments and technical skills. It is hard to quantify the amount of investment required for an infrastructure transformation towards blockchain; and what would be the return of such transformation.
- It’s difficult to account for all the dimensions that would be affected by a tokenization project. Few solution providers can coordinate the project from an advisory, regulatory, tax, legal and technical perspective.
How we can help you
We help you seize the opportunities of the new digital economy, relying on strategic, technical, and analytical skills. Having the largest team dedicated to digital assets and blockchain in Luxembourg, we have the capacity to provide you with tailored, best-in-class advice. With our network and strategic partnerships, we are the one-stop shop for all your digital assets and blockchain related projects.
- We deep dive into the specifics of these new technologies and assess the needs and the ways you can leverage their benefits to increase your market position and your competitiveness. We assess the impact of new decentralized web technologies (KYC, Custody, Transfer Agent function, Clearing & Settlement, encryption technologies, Self-Sovereign Identity, etc.) to help you anticipate developments that will lead to added value for your company.
- We study your project in detail and frame it functionally and technically, allowing you to clarify expectations and reduce the risks and costs associated with each stage of development:
- Functional framework: Workshops with business teams, definition of functional specifications.
- Technical architecture: Analysis of the relevance of the blockchain, comparison of protocols, estimation of associated costs.
- User experience: Proposal of graphic charters, user paths and models.
- We are committed to full transparency: our teams do not develop unrealistic blockchain projects. We don't push blockchain if it's not relevant to your project.
We help you develop a strategy so you can benefit from the opportunities offered by blockchain and digital assets
Services
Wherever you are in your journey, KPMG can provide insights and guidance through every phase.
- Advisory
- Tax
- Audit
Deal Advisory
- Valuation
- Financial due diligence
- Investor outreach (strategy, financials, market analysis)
Management / Regulatory Consulting
- Regulatory assessment
- Project management
- Roadmap and implementation strategy
- Funds management and milestone reporting
- Business model definition
- Vendor and platform assessment
Tax Advisory
- Fund structuring
- Acquisition structuring
- Tax due diligence
- Jurisdiction/domicile advisory
- Vendor assistance in the sale process
- Transfer pricing
- VAT advisory
- Personal tax advisory
- Smart contract analysis
Tax Reporting
- Reporting (DAC 8)
- FATCA / CRS
- Crypto asset reporting framework (CARF)
Tax Compliance
- Income tax returns
- Filing of tax returns
- VAT registration
- VAT returns
Audit
- Use of blockchain audit technology
- Assurance services helping clients meet regulatory requirements
- Analysis of transaction data from different blockchain
- Smart contract audit
Industries
- Alternative Investments and Asset Management
- Banking
- Insurance
Tokenization as a value chain disruptor
What is Tokenization?
Tokenization is a rapidly developing area in the financial industry which enables investment in the form of digital tokens backed by real world securities or assets. While traditional investments involve multiple intermediaries, high costs and poor liquidity, tokenization as an emerging technology tackles these challenges by:
- Allowing economies of scale with disintermediation by gathering the distribution, clearing and settlement, transfer agent and custody functions.
- Increasing liquidity from an asset management and a fund distribution standpoint by creating secondary markets, thus facilitating exit and entry strategies.
- Allowing the management of larger investors pools due to automation powered by smart contracts.
Forward thinking solution
Wherever you are in your tokenization journey, KPMG can provide insights and guidance through every phase. This includes:
- Roadmap and implementation strategy
- Advice on current and future regulatory frameworks and structuring possibilities
- Vendor and platform assessment
- Assisting in the Business Model definition
- Addressing Tax implication of your project such as structuring, reporting and compliance
- Audits
- Performing financial statement audits
- Custom-made services
Liability side
Assets side
A new age of digital currencies and decentralization
The appearance of new digital currencies such as stablecoins and an alternative financial system materialized by Decentralized Financed (so called “DeFi”) questions the economic models of banks and the barriers to entry into the banking industry. These emerging technologies also give way to tremendous innovation opportunities.
Beyond the opportunities for optimizing internal information systems, blockchain and digital assets are increasingly appraised by the Banking industry, which promotes their utilization. In the United States, more than a third of asset managers are exposed to digital assets.
Our role is to help financial players prepare for a world in which currencies and assets will be natively digital, programmable, easy to issue and far more numerous than today.
Our Digital Assets team could assist in all dimensions of your projects and help you navigate the complexities of these emerging technologies, notably by:
- Managing customers who want to transfer funds from his Security Token Offering
- Assessing the legal value of the blockchain for the certification of financial information
- Managing blockchain clearing houses
- Tracking the status of a cryptocurrency or token
- Preparing for the arrival of stablecoins
- Managing a cryptocurrency portfolio
- Meeting reporting obligations
Unlocking projects, products, and opportunities with blockchain
Blockchains are disrupting the insurance sector by lowering the barriers to entry. They open the way to the automation of products, and more generally to financial programming for entrepreneurs, allowing companies that do not have the critical size to position themselves as insurance providers. Some major players have already launched experiments, with insurance products against plane delays or for jewelry buyers.
If insurance is a playground for blockchain projects, the converse is also true: the blockchain ecosystem is a new market for insurance, which must create new products adapted to this field such as insurance against the failure of a smart contract or a blockchain protocol.
Our role at KPMG Luxembourg is to help industry professionals position themselves on the topics of blockchain and digital assets and respond to new challenges such as:
- Automating compensation
- Identifying insurance products for blockchain and crypto players
- Certification of insurance documents and processes
- Testing the legitimacy of a blockchain-based product
