The past few years have seen an exponential rise in activity related to digital assets, digital custody, digital payments (public and private stablecoins), tokenisation, Distributed Ledger Technology (DLT) in financial markets infrastructure and Web3 applications.
These innovations are being followed with regulatory developments including the Financial Markets Service Bill 2022 here in the UK, Markets in Crypto-Assets (MiCA) in Brussels and global standards being set by Financial Action Task Force (FATF), Basel Committee on Banking Supervision (BCBS), Financial Stability Board (FSB).
Here are the key stats of Crypto and Digital Assets industry.
Growth 1
Value of Crypto
Assets in Nov’22
Projected value of
Web3 by 2030
Total Value Locked (TVL)
into DeFi applications
at the 2021 peak
Investment 2
Value Creation
investment in 2022
Value Creation
funding in 2022
of global Value
Creation investment
is in Blockchain start-ups
Clients and
consumers 3
of adults in the UK
hold Crypto, expected
to double in 2023
FS clients with live
products and
strategies
Regulation 4
FCA CryptoSprints
Consultations across
regulators in the UK,
EMEA and APAC
1 Source: CoinGecko, Metaverse and Money, Citi GPS report 2022, Defi Llama
2 Source: Blockdata and CB Insights
4 Source: FCA and HM Treasury
Blockchain 101
DLT is the technology that underpins Blockchains. Blockchains are ledgers of data that are public, accessible to anyone and immutable. Crypto, digital assets or tokens (terms used interchangeably) are created by the blockchains protocol design for several reasons including economic, security, incentivisation, utility.
Our solutions
The nascent technology that underpins the crypto-asset ecosystem is exceptionally dynamic both in terms of the development of products and services but also the regulatory landscape.
We at KPMG have a dedicated team of experienced subject matter experts to support our clients within financial services, technology, corporate or government in a range of solutions to drive forward their business strategies.
We have considerable experience in providing Digital Assets strategic, risk and regulatory advice to financial institutions and crypto asset service provider.
Digital Assets - key credentials
KPMG is working with its partners to support the development of a summary report on the future of Digital Assets regulation in the UK. The report will be used to help inform regulators on the perspectives of financial institutions (banks, asset managers, exchanges) as well as crypto native firms.
Benefits:
- Expert regulatory insight provided from KPMG’s Regulatory Insight Centre.
- A wide panel of Enterprise Asset SMEs leveraged to deep dive into key risk areas for regulatory recommendations.
- A market-leading thought leadership paper to support UK government’s ambition to be a ‘Crypto-Hub’.
KPMG supported a leading Digital custody provider on the development of a control framework to achieve SOC2 compliance. Our expertise provided their team with recommendations for a robust control environment to underpin the safeguarding of billions of dollars of assets under custody.
Benefits:
- Designed and implemented a robust control framework to support SOC2 attestation.
- Tailored Digital Asset related controls covering key risks presented by the underlying technology.
KPMG developed collateral and delivered training to the team at a top tier law firm on digital assets and money laundering which covered an introduction to digital assets, key legal perspectives, trends across the regulatory landscape, and an overview of a comprehensive digital assets framework.
Benefits:
- A comprehensive learning strategy with objectives and outcomes delivered to the client on-site.
- Multiple feedback touchpoints to assess the reception of the training.
- Deep dive into topics relevant to the individual teams to maximise the relevance and impact of the training.
KPMG have provided tax and legal services to leading digital assets businesses, including the development of transfer pricing frameworks, pricing approaches, intercompany transaction policies, submission of non-statutory rulings to tax authorities to confirm VAT treatment, and the restructuring and reorganising of corporate groups for tax efficiency.
Benefits:
- Our Tax and Legal SMEs provided recommendations and insights which emboldened the client to more comfortably operate in the UK.
- Support embedding a holistic and efficient Tax approach for digital assets business.
Why KPMG?
KPMG firms have a wealth of experience across financial services, offering deal advisory, tax, legal and regulatory compliance insight and helping to implement transformational, technology and organisational change.
When launching new innovative products and services, this experience can help clients adapt to changing regulatory requirements, identify and manage emerging risks.
We support both traditional financial services firms together with offering our breadth of capabilities to firms solely operating in the blockchain and crypto sector.
Market leading strategic advisor
We are a market leading advisor with a global team of specialists across 25+ jurisdictions in Europe, Americas and Asia Pacific. We have extensive knowledge across digital assets and custody, strategy, risk and regulation across leading financial services institutions.
You know us, we know you
Our proven record of partnering with existing and new clients spans multiple key initiatives covering risk, strategy and beyond. Recent examples include our risk effectiveness review and risk governance transformation. We know how to work with you and you can rely on us to deliver.
Regulatory and market insights
We have deep relationships with the regulators and leading industry associations (e.g. FCA, UK Finance, Innovate Finance, Crypto UK). We have developed thought leadership on Digital Assets with our global member firms. This provides us with deep knowledge of peer best practices.
Tried-and-tested accelerators
From our wide experience of similar engagements, we have developed assets and accelerators that we will deploy to anchor your objectives, including our 9 Levers of Value, Enterprise Risk Framework, Risk and Control standards and operating model.
