55% of Family Offices Want More Crypto in Hong Kong and Singapore – Trustnodes

Wealthy families in Hong Kong and Singapore are looking to increase exposure to crypto according to Cerulli, a Boston based financial research company.

As much as 55% of family offices in these two hubs indicate interest in increasing exposure to crypto over the next two years, their research shows.

In further findings Cerulli says that in South Korea, crypto trumps direct stock trading, ETFs, and mutual funds, in that order, among millennials and Generation Z.

Interest is growing among some fund and wealth managers in Asia, they say, as they anticipate the retail demand for cryptocurrencies spilling over to mutual funds and exchange-traded funds (ETFs).

“Crypto funds offer an important asset-gathering opportunity for managers,” said Ken Yap, Managing Director at Cerulli, before adding:

“For investors, the growing number of mutual funds and ETFs coming to market help to widen product choices or even legitimize crypto investing by providing arguably safer routes to accessing this asset class, compared to direct crypto investing.”

Family offices in particular have shown interest in bitcoin as a way of preserving long term wealth due to its finite supply.

As much as 50% of them were looking to increase exposure last year, with interest this year seemingly even higher in Asia’s financial hubs of Honk Kong and Singapore.

That’s underlying what we are calling the second stage: institutional adoption. That remains in its infancy, in part because basic infrastructure was lacking prior to 2020.

Since then, there has been investment in that area, with new spin-offs and startups developing, but some regulatory barriers remain.

Cerulli points out for example that Korea does not yet permit the launch of crypto ETFs or mutual funds. Singapore seems to have a warmer stance on crypto, they say, but it still lags behind markets such as Australia in formal crypto-related ETF listings.

The US has also refrained from greenlighting a bitcoin spot ETF, but curiously there are some reports suggesting family offices would rather buy bitcoin directly in any event.

That can be useful as an ‘extreme’ hedge. If, for example, some stock options clearing house fell under, then a stock traded ETF might be caught up in the wider ‘analogue’ calamity.

As the bitcoin blockchain is outside clearing houses and is completely independent, it would not be affected at the ‘pipelines’ level, like stocks may be.

Outside of those extremes, however, an ETF that has custodial insurance can be more convenient.

But, except for instances where regulations require institutional custody, it is not too clear just how much the lack of ETFs in some jurisdictions is holding back the speed of bitcoin’s institutional adoption as self custody can reduce counter-party risks.

Regardless of form, the appeal of cryptos to family offices has been building up for some time now, with this latest finding adding to what could be a very lucrative niche for this space that satisfies a particular need: maintaining dynastical wealth.