Family Offices are embracing crypto, but support is needed

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Family office investment vehicles for high net worth individuals and their heirs are among the professional market players increasing their allocations to digital assets.

New research from Ocorian, a firm specializing in fund administration, capital markets, corporate and trust services, confirms that 130 global family office professionals managing over $62.4 billion in combined assets claim that 90% of customers inquire about or demand the inclusion of crypto in wallets. This highlights related issues faced by family office managers.

There are a number of challenges for family offices looking to invest in crypto. In addition to being a high-risk asset, they may face regulatory and practical challenges. This could lead to inconsistencies between global tax regimes. Therefore, it is extremely important that they have access to the right expertise to support them, according to Ocorian.

Family Offices Seek Crypto Clarity

As more clients demand exposure to crypto, some family office managers are confused by the lack of uniform regulation regarding this asset class and other compliance issues. This is likely a result of crypto being a young asset class. However, it is a conundrum that needs to be solved to attract more of these professional investors to the market.

Many family offices, especially those run by younger, tech-savvy generations, want to invest in crypto. However, given the challenges and risks associated with this asset class, this is concerning. Many struggle to find the right support with practical, regulatory and reporting requirements, noted Amy Collins, Ocorians family office unit manager.

Strengthening the outsourcing of this asset class is a clear path to improving access to crypto among family offices. In many cases, family office managers do not directly oversee all portfolio assets. Rather, in an effort to improve cost and efficiency, some of the investment management work is outsourced to third parties.

Currently, it is not impossible to deploy this strategy with digital assets, but there is a lot of room for improvement on this front. If these improvements are made, it is possible that more family offices will be allocated to crypto. This would potentially provide long-term support for the asset class.

However, research from Ocorian, which works with more than 60 family offices around the world, shows that eight in ten family offices (80%) and high net worth individuals find it difficult to outsource to third parties. These parties are ready to support regulatory and reporting obligations for digital assets, the research firm concluded.

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