The concept of Bitcoin, which once only existed in geek communities and white papers, has transformed dramatically in just sixteen years, officially breaking through the $100,000 mark and becoming a new financial asset valued at $2 trillion, ranking as the 12th largest economy in the world by market capitalization.
The ripples of this change have spread to the forefront of global wealth management. As a core institution symbolizing the accumulation and inheritance of wealth, family offices are redefining their strategic direction in the midst of this transformative tide.
With the push of policy, family offices are exploring virtual assets as a new domain for wealth preservation and appreciation. Hong Kong, with its mature financial infrastructure and regulatory advantages, is gradually becoming a hub where traditional wealth intersects with virtual assets. This bidirectional momentum is redefining Hong Kong's important position as a global center for wealth management and virtual assets.
New "Strategic Reserve Assets" for Traditional Financial Institutions
At the 2024 Bitcoin Conference, Trump stated that if elected, he would retain 100% of all Bitcoin currently held or acquired by the U.S. government, committing to maintain a "national strategic Bitcoin reserve." U.S. Senator Cynthia Lummis also proposed a Bitcoin bill for 2024, suggesting that the U.S. Treasury establish a national Bitcoin reserve, planning to acquire 1 million Bitcoins over five years, purchasing 200,000 each year.
Following Trump's victory, market optimism propelled Bitcoin to break through multiple price points, prompting more traditional institutions and even nations to reassess Bitcoin's potential, leading to a global competition regarding virtual asset reserves.
According to data from BitcoinTreasuries.com, as of December 13, 2024, 94 large entities (including companies and nations) publicly hold over 2.9 million Bitcoins, accounting for 13.81% of the total Bitcoin supply. Among them, global BTC ETFs hold over 1.294 million Bitcoins, publicly listed companies hold over 553,000 Bitcoins, and private enterprises hold over 366,000 Bitcoins.
Compared to directly incorporating Bitcoin into their balance sheets, more institutions are investing through Bitcoin ETFs, especially with the approval of the U.S. Bitcoin spot ETF, which has firmly attracted traditional investment institutions to this emerging field. Currently, U.S. BTC ETFs hold over 1.116 million Bitcoins, accounting for 86.92% of the total global BTC ETF holdings.
From the composition of institutional holdings in ETFs, hedge funds and investment advisors have become the main participants, while banks, quantitative funds, and state government investment funds have also included Bitcoin ETFs in their asset portfolios.
The latest 13F filings disclosed by the U.S. SEC show that as of the third quarter, nearly 700 institutional owners and shareholders collectively held 160.2 million shares of BlackRock's IBIT. Millennium Management increased its holdings by 12.6 million shares in the third quarter, Goldman Sachs increased by 5.77 million shares of IBIT, and JPMorgan increased by 387 shares of IBIT ($13,982) and 213 shares of FBTC ($11,877). Other traditional institutions, including the Wisconsin state government fund, Michigan pension fund, Morgan Stanley, Wells Fargo, UBS, BNP Paribas, Royal Bank of Canada, and Schonfeld Strategy Advisors, are also purchasing Bitcoin ETFs.
The new trend in global portfolios is becoming increasingly clear, with Bitcoin and virtual assets rapidly becoming an important component of capital allocation, reflecting the transformation of institutional markets. While we have seen publicly listed companies and large financial institutions prominently embrace virtual assets, it is even more noteworthy that those family offices that have remained low-key are also quietly taking action. Their strategies may be more resilient than those in the visible market, as they place greater emphasis on long-term stability and flexibility in capital allocation, often finding suitable investment opportunities in highly volatile markets.
Family offices are not influenced by short-term market pressures, allowing them to conduct in-depth layouts of virtual assets more calmly. Their hidden capital flows are becoming an important force driving the development of this emerging market.
The "Urgency" of Family Offices
Previously, the Wanfang Family Office announced a partnership with Huobi Technology to establish a digital family office platform, serving as a bridge between traditional investors and asset investments, providing high-net-worth investors with basic consulting and investment advice on virtual assets, as well as wallet integration and family governance solutions.
This year, the family office Avenir Capital, founded by Huobi's founder Li Lin, announced the purchase of $383 million worth of Bitcoin ETF products (IBIT and FBTC) in the second quarter and established a virtual asset quantitative mother fund, Avenir Crypto, with an initial fund size of $500 million. In October, the family office Lennertz announced it is raising $165 million for its third blockchain fund. Oksana Tiedt, the fund's investment director, stated in an interview that the fund has completed its first transaction but did not disclose the specific amount.
Virtual assets are becoming a new pivot for family offices in wealth management, providing some anti-inflation and hedging functions while also endowing asset portfolios with greater growth potential and diversification effects. Therefore, family offices are no longer passively accepting virtual assets but are actively seeking and accelerating their proportion in asset allocation.
Moreover, the core mission of family offices is inheritance. From the perspective of inheritance, the younger generation of heirs is mostly digital natives, naturally inclined towards technology and innovation, and virtual assets align with their values and investment preferences. The decentralized nature of virtual assets also allows them to transcend geographical boundaries, better responding to future economic fluctuations and generational changes, ensuring that wealth can continue to appreciate and be passed down over the long term.
In other words, family offices' investments in virtual assets are no longer limited to traditional asset management; they carry a dual mission of wealth inheritance, innovation, and adaptability.
According to a report released by Citibank in September, the proportion of family offices optimistic about virtual assets rose from 8% to 17%, with direct investment still being their preferred investment method. Compared to small family offices with asset management scales of less than $500 million, large family offices show greater interest in tokenized real-world assets (RWA), with 11% of large family offices having exposure to virtual assets, while this proportion is only 3% for small family offices. Small family offices, on the other hand, have a greater demand for derivatives, with 8% having exposure to these products.
From a global trend perspective, compared to the rapid layout in Europe and the U.S. markets, Hong Kong's virtual asset ecosystem was more in a testing phase in previous years. However, with the formal implementation of the Virtual Asset Service Provider (VASP) system in 2023 and the launch of the Bitcoin spot ETF in 2024, Hong Kong is rapidly emerging as a core hub for family offices in the Asia-Pacific region to allocate virtual assets. The demonstration effect of the Bitcoin spot ETF globally has also triggered a chain reaction in the Hong Kong market: more and more family offices are choosing to gradually enter the virtual asset market through Hong Kong's platforms and services.
Hong Kong: A New Hotspot for Family Office Virtual Asset Investment
Hong Kong's characteristics as an "institutional" market are very distinct, with its financial market focusing more on the participation of institutional investors and efficient capital flow. As a global leading wealth management and cross-border financial hub, Hong Kong has a complete financial ecosystem, a rigorous regulatory framework, and an excellent legal service network. Compared to other emerging family office destinations like Dubai and Singapore, Hong Kong possesses deeper investment management expertise and a broader global financial connectivity network, providing family offices with a unique geographical advantage.
In 2023, Hong Kong released a "Policy Declaration on the Development of Family Office Business in Hong Kong," proposing eight key measures, including widely discussed tax relief and a "Capital Investor Entry Scheme." According to a report commissioned by the Hong Kong Investment Promotion Agency and completed by Deloitte, by the end of 2023, over 2,300 single-family offices had been established in Hong Kong. Notably, this number does not include joint family offices, so the actual total is undoubtedly higher. As of May this year, the Investment Promotion Agency has assisted 83 single-family offices in establishing or expanding their businesses in Hong Kong, while another 130 have indicated they have decided or are preparing to set up family offices in Hong Kong. The agency is confident that the government will exceed its target of attracting 200 family offices to Hong Kong by 2025.
The rise of virtual assets further enhances Hong Kong's attractiveness to family offices. According to a survey by the Hong Kong Private Wealth Management Association, the trading volume of virtual assets in Hong Kong grew by 85.6% last year and this year, the highest increase in East Asia. About one-third of surveyed private wealth management companies expect the proportion of virtual asset allocation to be between 6% and 10% within five years, compared to the current proportion of only 2%, demonstrating significant growth potential.
Recently, Hong Kong authorities have proposed new measures to attract capital, suggesting that the scope of capital gains tax exemptions be expanded to cover overseas real estate, carbon credits, private credit, virtual assets, and other assets, applicable to private equity funds and qualifying single-family office investment vehicles.
This measure can reduce the tax burden on family offices and provide more motivation for international capital to explore virtual assets. With the dual support of tax incentives and legal protections, Hong Kong aims to build a robust investment environment. Compared to Singapore's flexible policies and Dubai's innovative experiments, Hong Kong's strategic layout is more sustainable and has far-reaching impacts. On this basis, Hong Kong will undoubtedly attract more international capital inflows, especially in the virtual asset sector, becoming a key node in global capital allocation.
At the same time, Hong Kong's infrastructure is continuously improving, providing strong support for participants in the virtual asset market. In this process, local virtual asset service institutions like HashKey Exchange have played a crucial role. As Hong Kong's largest compliant virtual asset exchange, HashKey Exchange has currently partnered with over ten financial institutions, including ZhongAn Bank and Victory Securities, and dozens of medium to large enterprises have completed virtual asset services with their own funds at HashKey Exchange, providing comprehensive solutions including account opening, investment, and trade settlement. Currently, HashKey Exchange has over a hundred partners, further consolidating its core position in Hong Kong's virtual asset market.
It is worth noting that HashKey Exchange's accumulated assets have surpassed HKD 9.8 billion and are expected to soon break the HKD 10 billion mark. This growth momentum indicates a sharp increase in market demand for compliant virtual asset services. Particularly this year, companies from the traditional financial services industry, such as brokerages, banks, asset management institutions, publicly listed companies, and family offices, have been opening virtual asset accounts. Many brokerages, after obtaining the No. 1 license upgrade, have partnered with HashKey Exchange to provide virtual asset deposit and withdrawal services for brokerage users through Omnibus brokerage operations. This means that the traders and investors behind these brokerages, especially those investing in Hong Kong stocks, can directly enter the virtual asset market for BTC, ETH, and others through compliant channels.
With the support of these infrastructures, Hong Kong can provide strong guarantees for family offices to smoothly participate in virtual asset investments, reducing complexities and barriers related to technology, compliance, and risk.
A New Order of Virtual Assets and Family Offices
Whether it is the institutional path formed in the U.S. market due to the launch of Bitcoin spot ETFs or the dividends released in Hong Kong due to policy support and geographical advantages, virtual assets are gradually occupying a more important position in family office asset allocation. Driven by the dual forces of the financial market's gradual institutionalization and the booming development of virtual assets, this transformation is not only an update of wealth management strategies but also a re-examination of the global economic landscape.
In the future, Hong Kong's leading position in the global family office competition will depend on its ability to achieve an effective balance between innovation and compliance while continuously improving the infrastructure of the financial market. Professional virtual asset service platforms, represented by HashKey Exchange, can provide compliance support and technical assurance for family offices participating in virtual asset investments, reducing the complexity and risk of entering the virtual asset field for family offices, and offering a more secure participation path for high-net-worth clients. The further development of this ecosystem will help Hong Kong occupy a more strategically significant position in the global wealth management landscape.
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