Web3 Is The Future For High-Net-Worth Individuals, But Can They Trust It?

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Web3 can provide many benefits to high-net-worth individuals, with new and exciting opportunities for them to manage and grow their wealth. 

Through exposure to cryptocurrencies, NFTs and tokenized assets like art and real estate, individuals can dramatically diversify their investment portfolios and access new and exciting markets. With decentralized finance, investors can engage in staking, lending and liquidity provisioning, and potentially benefit from some attractive yields that are difficult to find in traditional finance.

Anyone who is familiar with Web3 will know that it can provide enhanced financial flexibility within more dynamic and decentralized economies. But at the same time, most of those with significant funds available are cautious about increasing their exposure to digital assets. 

There are good reasons for this caution, as the Web3 industry’s regulatory status remains incredibly cloudy, and security is still a big question mark. It’s clear that some Web3 platforms are trustworthy, but there are many which are not, and even many of the honest DeFi protocols can still fall victim to glaring vulnerabilities in their underlying code. 

Still, that doesn’t mean that high-net-worth individuals should avoid investing in Web3 entirely, it just means they have to proceed with extra caution. They need to do their homework and identify legitimate platforms that have invested in strong security and worked hard to ensure compliance with global anti-money laundering and know-your-customer rules. 

In addition, they can focus their efforts on platforms that have achieved compliance with financial authorities in key crypto markets, such as Dubai, Singapore and Switzerland, which have already created specific regulations with Web3 in mind. 

Strong encryption is a must

The most reliable digital asset platforms are those that use strong encryption to secure user’s personal information and encrypt as much data as it’s possible to do. Some of the most reliable cryptographic security standards include biometric and homomorphic encryption, which can mask user’s transaction details from outsiders, while multiparty computation can offer further reassurances. 

Biometric security uses details such as the user’s facial scan, eye scan, fingerprints or even their voice as a kind of cryptographic key that’s required to access their accounts. Such techniques go a long way towards preventing unauthorized account access. Meanwhile, homomorphic encryption is a technique that allows data to be processed without ever decrypting it, meaning that it’s never exposed to bad actors, even when it’s stolen in a breach. 

As for multiparty computation, this is a computing technique that splits work across multiple servers, ensuring that no single server has possession of all of the encrypted data at the same time, so even if one is hacked, the data that’s stolen is useless to whoever gains access to it.  

Regulatory compliance provides reassurance

Affluent individuals must also consider the compliance status of Web3 platforms, as well as other indicators of their financial health, such as their funding sources, investor backing and profitability. 

These factors aren’t always very apparent, but one way to ensure a platform is legitimate is to consider what kind of financial certifications it has achieved. 

Certifications to look out for include the Swiss Financial Market Supervisory Authority or FINMA, which is the independent regulatory body that governs financial institutions in Switzerland, including banks, investment companies and crypto exchanges. It’s known for its risk-based approach to supervision of such institutions, and it works to identify threats that might put such organizations at risk of financial crimes. It’s especially vigilant about money laundering and the finance of terrorism, and conducts regular audits and reviews of any certified institutions. 

Others include the Dubai Financial Services Authority or DFSA, which is the guardian of financial integrity within Dubai’s financial economy. It ensures that institutions ranging from banks to investment firms and crypto companies are in full compliance with Dubai’s stringent regulatory requirements, in adherence to its ethical standards, and maintain market integrity. 

Finally, a growing number of Web3 firms adhere to the regulations of the Monetary Authority of Singapore or MAS. Singapore has become a hotbed of crypto startups, and MAS does the job of regulating all such businesses in its territory. 

Web3’s advantage in wealth management

If you can find a platform that’s regulated by all three of those organizations, you can be reassured that your finances are in safe hands, which is why the digital wealth management platform Welf stands out as a promising option for high-net-worth individuals. 

Welf, unlike traditional private banking services, operates 24/7, providing instant access to funds globally. Its products include tailored and exclusive investment opportunities, cash management, high-limit credit and debit cards that are accepted globally, luxury concierge services and advanced security. With it, clients can access a modern, fully-digital wealth management platform that blends traditional financial instruments with DeFi-based yield-generating opportunities and tokenized investments, expanding their financial opportunities. 

Welf’s native token WELF is required to access the platform, and sits at the heart of its ecosystem, as the main currency for transaction and service fees, and also as the cornerstone of its community governance mechanism. Clients are required to stake WELF tokens for access to its services and additional yield opportunities. The token is currently available via pre-sale IDOs on Polkastarter and Ape Terminal.

Summing up

Web3 is a vast and exciting financial ecosystem that has lots of potential for affluent individuals to diversify their portfolios and increase their wealth. However, it’s also a risky new economy that’s plagued by security concerns and scams, and that means regulatory compliance is a must for any serious investor. 

By achieving regulatory compliance, Web3 platforms demonstrate they’re committed to growing the decentralized finance system in a secure and ethical way, reassuring stakeholders, creating new opportunities for high-net-worth individuals.