According to a report from 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 CIO 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, based on a survey of 76 single and private multi-family offices in the Asia Pacific region, found that although digital assets make up less than 0.5% of the assets under management (AUM) of family offices in the region, approximately 9% of family offices have yet to implement cryptocurrency plans to establish positions in this asset class.
Preference for liquidity investments in digital assets has grown. In January, multiple Bitcoin spot ETFs were listed in the United States, allowing institutional investors and retail investors to gain exposure to this asset without directly purchasing Bitcoin. Additionally, the Hong Kong government has introduced a series of regulations to embrace digital assets, including approving virtual asset (VA) trading platforms to serve retail investors. In December last year, Hong Kong regulators further stated that besides existing virtual asset futures ETFs, they are ready to accept applications for other funds involving virtual assets, including spot ETFs.
While the increased regulatory clarity and market price recovery are positive signs for the development of the cryptocurrency industry, macroeconomic disadvantages and escalating geopolitical tensions have prompted Asian family offices to adopt more conservative investment approaches.
Brian Chan, Head of Investment and Product 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 invest in digital assets through liquidity strategies.
When asked which investment strategy is most favored by family offices, Chan stated, “Cryptocurrency hedge funds are still the preferred choice.”
Compared to the previous bull market, Asian family offices have developed greater maturity in terms of digital asset allocation and have shifted towards more rational return expectations. Kwan from Revo Digital Family Office stated, “During the previous bull market, many Asian family offices engaged with this asset class through direct token investments in hopes of generating excess returns. But now, investors’ thinking has changed,” according to Brian Chan.
Patrick Tsang, Chairman of Tsang Group, a family office in Hong Kong, believes that with the Bitcoin halving scheduled for April, the industry will see better development in the second half of 2024. Tsang also stated in an email interview with DealStreetAsia that he believes digital asset allocation will grow in “any family office investment portfolio” as the next generation gradually takes over Asian family offices.
