Asia-Pacific family offices poised to lead world in cryptocurrency investments

Family offices in Asia-Pacific are fostering a newly energised enthusiasm for investments in the $1.9 trillion cryptocurrency market, ahead of European and North American counterparts, buoyed by pandemic-defying increases in wealth over the past 12 months.

The new Asia-Pacific edition of The Global Family Office Report 2021 by Campden Wealth with Raffles Family Office revealed only 19% of family offices Asia-Pacific invested in cryptocurrency, a notable shortfall in contrast to peers in North America, at 31%, and Europe, at 28%. Cryptocurrency formed a mere 2% of portfolio allocations in the region.

However, Campden Research discovered the outsized returns made in digital assets have caught the attention of family offices in Asia-Pacific. More than half, at 53%, of families in the region hailed cryptocurrency as a “promising investment”, leading the pack compared to North America, at 43%, and Europe, at 33%.

Campden Research found more than one-third of family offices in the region planned on increasing their investment in cryptocurrency in 2022.

“This is significantly higher than expected allocations to cryptocurrency in North America (30%) and Europe (17%),” the report said.

Asia-Pacific families had the equity and appetite for risk in crypto, fuelled by next-generation enthusiasm. Three in four families’ wealth rose over the pandemic and seven in 10 family offices saw an increase in assets under management. Rising asset prices, unprecedented stock market gains, the tech boom and record deal-making and valuations in private markets were some of the factors behind these increases, the report said.

Half of Asia-Pacific family offices were realigning their portfolios to pursue more growth-oriented investments—pointedly more than those in Europe, at 35%, and North America, at 32%.

Brynne Kennedy (pictured), an investor, entrepreneur and former politician, is a partner at the smart society venture capital fund BCP Blitz. Kennedy said the crypto investment space was “very interesting” and she knew many investors who were getting a toehold with potentially rapid high yields as a motivator.

“On my personal front, I'm looking at putting 10% or so allocation into crypto,” she said.

“I think it's an opportunity to achieve high returns with shorter timelines. In venture, in early stage companies, we can achieve very high returns, but they take 5-7 years minimum. I think with the volatility, which I say from a positive perspective, on crypto played right, you can achieve higher returns in a shorter period of time.

“You have to be prepared for volatility. I'm personally pursuing it through a crypto fund with a manager so some of that exposure can hopefully be mitigated in an active trading strategy.”

Geoffroy Dedieu (pictured) is the head of family office, Europe at FamilyOfficeHK/Invest Hong Kong. The experienced single-family office manager has set up and restructured family offices, private funds and family investments holdings in Europe and Asia.

Dedieu said cryptocurrency was “all the rage” for the next generation in Asia-Pacific family offices. However, the level of concern about the volatility of crypto depended on which generation you were talking with.

“One of the things, as a family officer, you tell families is if you don’t understand it, don’t invest in it,” Dedieu said.

A family member in Hong Kong told Campden Research his family office had not invested in Fintech or cryptocurrency, “as it is too advanced for my dad to understand”.

The member said: “I have personally invested into some Fintech startups as well as Bitcoin and Ethereum. I think there is a good potential for growth there. I want to learn from my investments before bringing my family into an asset class that I think has potential. I play with a much smaller ticket size, and I think of my investment as a tuition fee. It allows me to get to know the circle of people that are involved in this space and to keep up with the latest developments.”

Zann Kwan (pictured) is a digital asset and Fintech expert from Singapore and is an independent advisory board member at Raffles Family Office. Asked if cryptocurrency was a divisive topic, Kwan said the division stemmed from an education gap, which was exacerbated by the fast evolution of the digital asset sector.

“People who are trying to learn about the space can find it overwhelming, as new products are constantly being launched and existing products are always being updated,” Kwan said.

“Regulatory changes are also happening all the time. Investors interested in digital assets need to keep abreast of all these changes and familiarise themselves with the space.”

Find out more in the new Asia-Pacific edition of The Global Family Office Report 2021 by Campden Wealth with Raffles Family Office.