Key Points
Asian family offices are progressively turning their attention towards digital assets. Many are planning to augment their investments in this sector.
Increasing Interest in Digital Assets
Zann Kwan, the managing partner and chief investment officer at Revo Digital Family Office, points out a rising trend among family offices in crypto. The shift in strategy is aimed at diversifying portfolios and potentially boosting returns. This includes both direct and indirect investments in cryptocurrencies, crypto funds, structured products, and direct private equity investments.
Even though digital assets make up less than 0.5% of the total assets under management in Asia-Pacific family offices, a clear trend is emerging. A report by Campden Wealth and Raffles Family Office unveiled a growing interest in cryptocurrencies. Approximately 9% of family offices without current crypto investments are planning to enter this asset class.
The appeal of digital assets has been strengthened by substantial price increases in cryptocurrencies such as bitcoin and ether in 2023. During this period, bitcoin’s value soared over 160%, achieving a market cap of over $1 trillion for the first time since December 2021. Also, the approval of the first U.S.-listed spot bitcoin exchange-traded funds (ETFs) in January was a significant landmark, opening investment channels for both institutional and retail investors.
Hong Kong has been forward-thinking in regulating digital assets. It’s preparing for applications for virtual asset (VA) spot ETFs, potentially becoming the first Asian market to introduce such products. However, macroeconomic difficulties and geopolitical tensions have resulted in a careful investment approach among Asian family offices.
Brian Chan from Venture Smart Financial Holdings (VSFG) noted an interest in liquid investments, particularly crypto hedge funds. Family offices are looking for flexibility in the current economic climate. This comes as the crypto hedge fund sector is showing signs of recovery from the challenges it faced in 2022. There was a significant increase in the industry’s assets under management towards the end of 2023, indicating a revived interest in investments in digital assets.
On the other hand, crypto venture capital activity experienced a decrease in 2023. Investments dropped to a third of the previous year’s levels. This shift has resulted in a dominance of passive investment products in the crypto fund market, suggesting a strategic pivot towards more stable, lower-risk investment options.
Blockchain development in Asia continues to expand. Recent approvals for the merger of Layer-1 blockchains Klaytn and Finschia aim to establish an extensive web3 ecosystem in the region. This includes over 45 companies, 420 decentralized applications (dApps) and services, and over 250 million wallet users.
