Family offices – investment vehicles geared toward high-net-worth individuals and their heirs – are among the professional market participants who are increasing allocations to digital assets.
New research from Ocorian, a firm specializing in “fund administration, capital markets, corporate and fiduciary services,” confirms 130 global family office professionals managing more than $62.4 billion in combined assets are saying 90% of clients are inquiring about or demanding the inclusion of crypto in portfolios. That highlights related issues facing family office managers.
“There are a number of challenges for family offices looking to invest in crypto. As well as being a high-risk asset, they can be faced with regulatory and practical challenges. This could lead to inconsistencies between global tax regimes. Therefore it’s vitally important that they access the right expertise to support them,” according to Ocorian.
Family Offices Crave Crypto Clarity
As more clients demand crypto exposure, some family office managers are confounded by a lack of uniform regulations pertaining to this asset class and other compliance issues. That’s likely the result of crypto being a young asset class. However, it’s a riddle that needs to be solved to bring more of these professional investors into the market.
“Many family offices, particularly those run by younger, tech-savvy generations, want to make a move into investing in crypto. However, given the challenges and risks associated with this asset class, it’s concerning. So many are struggling to find the right support with the practical, regulatory, and reporting requirements,” noted Amy Collins, head of Ocorian’s family office unit.
One clear avenue for improved crypto access among family offices is bolstering outsourcing of this asset class. In many cases, family office managers don’t directly oversee all of the assets in the portfolio. Rather, in an effort to improve costs and efficiencies, some of the investment management work is outsourced to third parties.
Currently, it’s not impossible to deploy that strategy with digital assets, but there’s ample room for improvement on this front. Should those improvements be made, it’s possible more family offices will allocate to crypto. This would potentially providing long-term support for the asset class.
“However, the research from Ocorian, which works with more than 60 family offices around the world, shows eight in ten (80%) family offices and high net worth individuals are struggling to outsource to third parties. Those parties are willing to support in the regulation and reporting obligations of digital assets,” concluded the research firm.
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