Web3 can provide many benefits to high net worth individuals, offering them new and exciting opportunities to manage and grow their wealth.
Through exposure to cryptocurrencies, NFTs, and tokenized assets like art and real estate, people 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 returns that are hard to find in traditional finance.
Anyone familiar with Web3 will know that it can provide greater 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 regulatory status of the Web3 industry remains incredibly confusing and security remains a big question mark. It is clear that some Web3 platforms are trustworthy, but there are many that 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 high-net-worth individuals should avoid investing in Web3 entirely, it just means they should proceed with extra caution. They should do their homework and identify legitimate platforms that have invested in strong security and have worked hard to ensure compliance with global anti-money laundering and know-your-customer standards.
Additionally, 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 trusted digital asset platforms are those that use strong encryption to protect the user’s personal information and encrypt as much data as possible. Some of the most reliable cryptographic security standards include biometric and homomorphic encryption, which can hide user transaction details from outsiders, while multi-party computation can offer more guarantees.
Biometric security uses details such as the user’s facial scan, eye scan, fingerprints, or even their voice as a kind of cryptographic key needed to access their accounts. These techniques go a long way toward preventing unauthorized account access. Meanwhile, homomorphic encryption is a technique that allows data to be processed without ever decrypting it, meaning it is never exposed to bad actors, even when it is stolen in a breach.
As for multi-party computing, it is a computing technique that divides work between multiple servers, ensuring that no server has possession of all the encrypted data at the same time, so even if one is hacked, the stolen data They are useless to anyone. manages to access it.
Regulatory Compliance Provides Peace of Mind
Wealthy individuals should also consider the compliance status of Web3 platforms, as well as other indicators of their financial health, such as their funding sources, investor support, and profitability.
These factors are not always very obvious, but one way to ensure that a platform is legitimate is to consider what type of financial certifications it has obtained.
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 is known for its risk-based approach to the supervision of such institutions and works to identify threats that could put such organizations at risk of committing financial crimes. It is especially vigilant against money laundering and terrorist financing, and conducts regular audits and reviews of any certified institution.
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 cryptocurrency companies fully comply with Dubai’s strict regulatory requirements, adhere to its ethical standards, and maintain market integrity.
Finally, a growing number of Web3 companies adhere to the regulations of the Monetary Authority of Singapore or MAS. Singapore has become a hotbed of new cryptocurrency companies and MAS is responsible for regulating all these companies in its territory.
The advantage of Web3 in wealth management
If you can find a platform that is regulated by those three organizations, you can rest assured that your finances are in good hands, which is why 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 worldwide. Its products include exclusive and personalized investment opportunities, cash management, high-limit credit and debit cards accepted worldwide, luxury concierge services and advanced security. With it, clients can access a modern, fully digital wealth management platform that combines traditional financial instruments with return generating opportunities based on DeFi 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 primary currency for transaction and service fees, and also as the cornerstone of its community governance mechanism. Customers must stake WELF tokens to access its services and additional performance opportunities. The token is currently available via pre-sale IDO on Polkastarter and Ape Terminal.
summing up
Web3 is a vast and exciting financial ecosystem that has great potential for wealthy people to diversify their portfolios and grow their wealth. However, it’s also a risky new economy that’s rife with security concerns and scams, and that means regulatory compliance is a must for any serious investor.
By achieving regulatory compliance, Web3 platforms demonstrate that they are committed to growing the decentralized financial system in a secure and ethical manner, reassuring stakeholders and creating new opportunities for high net worth individuals.
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