AXA Investement Managers, the AXA Group’s investment management subsidiary, has just registered as a Digital Asset Service Provider (DAP). We asked Faustine Fleuret, the president of Adan, what the arrival of such a behemoth means for the PSAN ecosystem and more broadly for the cryptocurrency market.
AXA wants to offer cryptocurrency services
On March 7, Axa’s investment management subsidiary, Axa Investment Managers, was registered as a Digital Asset Service Provider (DAP).
Thanks to this registration issued by the French Financial Markets Authority (AMF), Axa Investment Managers will be able to offer custody, purchase, sale and exchange services for digital assets.
Registration of AXA Investment Managers on the AMF website
The AXA Group’s interest in cryptocurrencies and the blockchain sector is not new, however: in April 2021, its subsidiary AXA Switzerland announced that it was accepting Bitcoin (BTC) as a means of payment for its insurance services as part of a partnership with Bitcoin Switzerland. A manager of the subsidiary mentioned at the time “the growing demand from its customers” for this alternative payment method.
In the same vein, in February 2022, AXA France offered itself a parcel in the metaverse of The Sandbox (SAND), justifying this audacious initiative by its “responsibility to take part in the great technological advances to imagine the insurance of the future”.
What does it mean to have such a giant in the NSP ecosystem
The arrival of Axa in the sector is not insignificant: the French group, which operates internationally, generates tens of billions of euros in revenue each year. Its subsidiary AXA Investment Managers is not to be outdone, as it also operates throughout the world. 827 billion in assets under management, with funds coming from both institutional and individual clients.
To understand the interest of such a company to register as a PSAN, we asked Faustine Fleuret, the president of the Association for the Development of Digital Assets in France (Adan), a few questions.
The Axa group has just affirmed its interest in the digital assets sector, with its subsidiary Axa Investment Managers having just been registered as a digital asset service provider (DASP). How do you perceive the arrival of such a giant in the field, which also holds more than 820 billion dollars of assets under management?
Faustine Fleuret: Adan welcomes AXA IM’s registration as a DAS, which is a new sign of institutionalisation of the sector and shows that a growing number of players who do not necessarily come from the crypto ecosystem perceive the potential of this innovation. As such, they can appropriate it for their own purposes, but also develop it and use it to create new businesses.
The highlight of this announcement is AXA’s membership of the CAC40, which directly echoes the registration of Forge, the Société Générale subsidiary, which also registered as a NSP last September. The arrival of players of this stature directly adds credibility to the crypto-asset category and the use cases it enables. As the field of crypto-assets remains a sensitive subject, the arrival of such companies helps to get things moving and encourage other large companies to follow suit.
It is also worth noting that the registration of AXA IM helps to strengthen the still shy links established between traditional finance and the crypto sector players. Indeed, these links are directly a vector of adoption, since if we take the case of AXA IM, we can imagine that many of its clients are not necessarily familiar with crypto assets. Therefore, the registration we are talking about here could enable them to open up to it.
Finally, with the adoption of crypto-assets by institutions, we can also imagine that the usual disincentives for companies wishing to register as a PSAN could be more easily overcome.
We know that PSAN registration (which no company has yet managed to obtain) requires companies wishing to obtain it, among other things, to take out professional indemnity insurance (RC pro). As the Axa group specialises primarily in insurance, is it trying to take the lead in this respect? It could offer to insure the funds of other NSPs, or, in another case, to insure its own subsidiary and thus create a monopoly by obtaining approval.
F.F: Although we are not privy to AXA’s secrets, the fact is that AXA’s subsidiary will have to be authorised to offer its services under the MiCA regime, a necessary step for those who wish to operate within the European Economic Area once the latter comes into force. Today, NSPs face certain prudential requirements to obtain professional liability insurance to cover their activities.
We know that these products are still extremely rare today and are therefore complicated for NASPs to obtain. Very few insurers currently offer to cover NSPs for this purpose, and the few that do still do so at extremely prohibitive rates, which constitutes a significant barrier to entry for new entrants who are sometimes just starting up their activity. A lack of offers is also justified by a certain lack of understanding of the sector and its inherent risks.
As for AXA IM, since the company will inevitably have to insure itself in the future, it is quite possible that it will offer insurance services dedicated to the sector when the time comes, since it will itself make use of them by necessity. However, it is also possible that AXA will want to be self-sufficient in terms of insurance without offering this type of cover to other NSPs, but this is still difficult to determine.
In any case, AXAI IM’s registration as a NASP is good news for the sector and is a proof of credibility for the whole cryptocurrency market, which could help, why not, to remove the brakes that NASPs are facing today.
We contacted AXA IM who gave us the following clarification:
“This registration as a Digital Asset Service Provider (DASP) is an important step for us and should be beneficial for our initiatives around blockchain technology on which we are actively working, such as the tokenisation of financial securities or funds, and the interest of using digital currencies such as CBDCs (central bank digital currencies) or stablecoins in our ecosystem.
The application for registration was made at the end of 2021 to allow us to develop in digital assets. But we can confirm that AXA IM does not have an investment strategy or exposure to cryptocurrencies (Bitcoin, Ethereum…) – nor do we plan to. “
