According to a report by Nikkei Asia, family offices in Asia are seeking to increase their allocation to digital assets, as liquidity strategies gain significant attention among wealthy individuals and families in the region. Zann Kwan, Managing Partner and Chief Investment Officer of Revo Digital Family Office, a wealth management firm, stated in an interview with DealStreetAsia that these allocations include both direct and indirect exposure to cryptocurrencies, covering a range of cryptocurrency funds, structured products, and direct private equity investments.
A report released in December by Campden Wealth and Revo Family Office, after surveying 76 single and multi-family offices in the Asia-Pacific region, found that although the proportion of digital assets to total assets under management (AUM) of family offices in the region is less than 0.5%, approximately 9% of family offices have yet to implement cryptocurrency strategies to establish positions in this asset class.
The preference for liquidity investments in the digital asset space is evident. In January of this year, multiple Bitcoin spot ETFs were listed in the United States, allowing institutional investors and retail investors to gain exposure to the asset without directly purchasing Bitcoin. Additionally, the Hong Kong government has established a series of rules to embrace digital assets, including approving virtual asset (VA) trading platforms to serve retail investors. In December last year, the regulatory authority in Hong Kong further stated that, in addition to existing virtual asset futures ETFs, it is ready to accept other fund applications related to virtual assets, including virtual asset spot ETFs.
Although the increased regulatory clarity and market price recovery are positive signs for the development of the cryptocurrency industry, macroeconomic headwinds and escalating geopolitical tensions have prompted Asian family offices to adopt more conservative investment approaches.
Brian Chan, Head of Investments and Products Group at Venture Smart Financial Holdings (VSFG), a virtual asset management company approved by the Hong Kong Securities and Futures Commission, stated in an interview with DealStreetAsia that in the current market conditions, Asian family offices are increasingly inclined to pursue liquidity investments in the digital asset space. When asked about the most favored investment strategy among family offices, Chan stated, “It is still cryptocurrency hedge funds.”
Compared to the previous bull market, Asian family offices have become more mature in terms of digital asset allocation and have shifted towards more rational return expectations. Kwan from Revo Digital Family Office stated, “In the previous bull market, many Asian family offices engaged with this asset class through direct token investments, hoping for outsized returns. But now, investors’ mindset has shifted.”
Patrick Tsang, Chairman of Tsang Group, a family office in Hong Kong, believes that with Bitcoin halving scheduled for April, the industry will have better development in the second half of 2024. Tsang also expressed in an interview with DealStreetAsia that he believes digital asset allocation will grow in “any family office investment portfolio” as the next generation takes over Asian family offices.
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