Family offices' view on the crypto space

Tokenize the World. Episode 5 - Host Megha Chaddah of Forkast.News and Henry Chong discuss how over half of Asian family offices now see cryptocurrencies as a promising investment. Family offices should think from their own experience and apply this evolution of crypto market aka Crypto 2.0 into transforming their own business like digitising their own companies’ capital structure.

January 31, 2022
min read

Just a few years ago, many family offices were still wondering if cryptocurrencies were a real asset. But according to Campton researchers' recent Global Family Office Report, more than half of family offices in the Asia Pacific region now see cryptocurrencies as a promising investment. But do they really believe digital assets like cryptocurrencies and NFTs are here to stay?

Why are family offices in Asia so keen on crypto and digital assets?

I think the answer is because, at least here in Asia, a lot of families are much younger than in the west, in the sense of, the people running in the family officers are still in the first or second generation. They clearly remember what it's like to enter an industry, come up with a radically new solution to an old problem, and win the industry by doing so. Almost by definition, that's how they got to where they are today. They couldn't have done that if they weren't willing to be innovators and disruptors. So, I think when they look at a technology like blockchain, and start to explore things like security tokens, they see the same patterns starting to emerge. That's why they've jumped into this entire industry.

What are the potential pitfalls family offices should be looking out for, when investing in these new asset classes?

When looking at the digital asset space, family offices shall think about how they might use emerging technologies and business models to solve challenges in their businesses. It's very tempting, of course, to enter a market and just purely speculate. Plenty of people obviously do in the cryptocurrency markets. But the questions they shall asked themselves shall be: How can I use blockchain technology for my business? How can I also use it to digitize my own company's capital structure? How can I use security tokens to turn some of my stakeholders into shareholders?

What barriers prevent full scale adoption of digital securities in the family office space?

One is, sometimes family offices say cryptocurrencies and digital asset industry are very exciting but a bit scary also. They don't know what service providers and counterparties to interact with. But that can and will change. There will be more and more fully licensed and regulated platforms emerging, like Fusang, that I think institutions will be comfortable dealing with and that are used to dealing with institutional workflows.

The second and the much bigger barrier to mass institutional adoption is regulated assets. As much as platforms are important, you always need to look at, what is the underlying token and what it represents. I think a lot of families look at the crypto space as a bit adventurous, so that's really what they're waiting for: high quality and regulated tokenized assets.

We recently were able to announce the Fusang IPO. We hope that this is the first of many kind of people coming in, doing these kinds of fully regulated issuances.

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