Bitcoin, a concept that once existed only in geek communities and white papers, has transformed in just sixteen years, officially breaking through $100,000, becoming the world's 12th largest economy by market value and a new financial asset worth $2 trillion.
The ripples of this change have spread to the forefront of global wealth management. As a core institution that symbolizes the accumulation and inheritance of wealth, family offices are standing in the torrent of change to redefine their own strategic direction.
With the help of policies, family offices are exploring virtual assets as a new area for wealth preservation and appreciation, and Hong Kong, with its mature financial infrastructure and advantages in regulatory environment, is gradually becoming a hub where traditional wealth and virtual assets meet. This two-way driving pattern is redefining Hong Kong's important position as a global wealth management and virtual asset center.
New “strategic reserve assets” for traditional financial institutions
Trump said at the 2024 Bitcoin Conference that if elected, he would retain 100% of all Bitcoin currently held or acquired by the US government in the future, and promised to maintain a "national strategic Bitcoin reserve." US Senator Cynthia Lummis also proposed the 2024 Bitcoin Act, suggesting that the US Treasury Department establish a national Bitcoin reserve, planning to acquire 1 million Bitcoins within five years, 200,000 per year.
After Trump's victory, market optimism helped Bitcoin break through multiple price barriers, prompting more traditional institutions and even countries to re-examine the potential of Bitcoin, thus triggering global competition for virtual asset reserves.
According to data from BitcoinTreasuries.com, as of December 13, 2024, 94 large entities (including companies and countries) publicly hold more than 2.9 million bitcoins, accounting for 13.81% of the total supply of Bitcoin. Among them, global BTC ETFs hold more than 1.294 million bitcoins, listed companies hold more than 553,000 bitcoins, and private companies hold more than 366,000 bitcoins.
Compared with directly incorporating Bitcoin into the balance sheet, more institutions use Bitcoin ETFs for investment. In particular, the approval of the US Bitcoin spot ETF has attracted the attention of traditional investment institutions to this emerging field. Currently, the US BTC ETF has a total of more than 1.116 million Bitcoins, accounting for 86.92% of the total global BTC ETF.
Judging from the composition of institutional holdings of 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 documents disclosed by the US SEC show that as of the third quarter, nearly 700 institutional owners and shareholders held a total of 160.2 million shares of BlackRock IBIT. Millennium Management increased its holdings by 12.6 million shares in the third quarter, Goldman Sachs increased its holdings by 5.77 million shares of IBIT, and JPMorgan Chase increased its holdings 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 all buying Bitcoin ETFs.
The new trend of global investment portfolios is becoming more and more distinct. Bitcoin and virtual assets are rapidly becoming an important part of capital allocation and a microcosm of the transformation of institutional markets. Although we have seen listed companies and large financial institutions embracing virtual assets in a high-profile manner, it is more noteworthy that family offices that have always kept a low profile are also quietly taking action. Their layout may be more resilient than the explicit market, because they pay more attention to long-term stability and flexibility in capital allocation, and can often find suitable investment opportunities in markets with greater volatility.
Family offices are not affected by short-term market pressures and can more calmly make in-depth layouts of virtual assets. Their implicit capital flows are becoming an important force driving the development of this emerging market.
The “urgency” of family offices
Previously, Wanfang Family Office announced a partnership with Huobi Technology to establish a digital family office platform as a bridge between traditional investors and asset investments, providing high-net-worth investors with basic consulting and virtual asset investment and related advice, as well as wallet integration, inheritance family governance solutions and other services.
This year, Avenir Capital, the family office of Huobi founder Li Lin, announced that it had purchased $383 million worth of Bitcoin ETF products (IBIT and FBTC) in the second quarter, and established Avenir Crypto, a virtual asset quantitative fund, in September, with a first-phase fund size of $500 million. In October, family office Lennertz announced that it was raising $165 million for its third blockchain fund. Oksana Tiedt, investment director of Lennertz Fund, said in an interview that the fund had completed its first transaction, but did not disclose the specific amount.
Virtual assets are becoming a new fulcrum for family office wealth management. While providing some anti-inflation and risk hedging functions, they also give asset portfolios more growth potential and diversification effects. Therefore, family offices are no longer passively accepting virtual assets, but actively seeking and accelerating their proportion in asset allocation.
In addition, the core mission of family offices is inheritance. From the perspective of inheritance, the younger generation of heirs are mostly digital natives who have a natural affinity for technology and innovation, and virtual assets are in line with their values and investment preferences. The decentralized nature of virtual assets can also enable them to transcend geographical boundaries, better cope with future economic fluctuations and generational changes, and ensure that wealth can continue to increase in value and be passed on over the long term.
In other words, family offices’ investment in virtual assets is no longer limited to traditional asset management, but rather carries the dual missions of wealth inheritance, innovation, and adaptability.
According to a report released by Citibank in September, the proportion of family offices optimistic about virtual assets has increased from 8% to 17%, and direct investment is still their favorite investment method. Compared with small family offices with less than US$500 million in assets under management, large family offices have shown greater interest in tokenized real-world assets (RWA), with 11% of large family offices holding virtual asset exposure, while the proportion of small family offices is only 3%. Small family offices have a greater demand for derivatives, with 8% holding exposure to these products.
From a global perspective, compared to the rapid deployment of the European and American markets, Hong Kong's virtual asset ecosystem was more in the experimental stage in the past few years. However, with the official 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 in the world has also set off a chain reaction in the Hong Kong market: more and more family offices choose 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 is a very distinctive "institutional" market, with its financial market focusing more on the participation of institutional investors and efficient capital flows. As a leading global wealth management and cross-border financial hub, Hong Kong has a sound financial ecosystem, a rigorous regulatory framework and an excellent legal services network. Compared with other emerging family office destinations such as Dubai and Singapore, Hong Kong has deeper investment management expertise and a wider global financial connection network, providing family offices with unique geographical advantages.
In 2023, Hong Kong issued the Policy Declaration on the Development of Family Office Business in Hong Kong, proposing eight key measures, including the widely-watched tax concessions and the Capital Investor Entrance Scheme. According to a report commissioned by Invest Hong Kong to be completed by Deloitte, by the end of 2023, more than 2,300 single-family offices had been established in Hong Kong. It is worth noting that this figure does not include joint family offices, and the actual total number is undoubtedly higher. As of May this year, Invest Hong Kong has assisted 83 single-family offices in setting up or expanding their businesses in Hong Kong, while another 130 have indicated that they have decided or are preparing to open family offices in Hong Kong. The agency expects that it is confident that the government will exceed its goal of having 200 family offices in Hong Kong by 2025.
The rise of virtual assets has further strengthened Hong Kong's appeal to family offices. According to a survey by the Hong Kong Private Wealth Management Association, the transaction volume of virtual assets in Hong Kong increased by 85.6% last year and this year, ranking first in East Asia. About one-third of the private wealth management companies surveyed expect that the allocation ratio of virtual assets will be between 6% and 10% within five years, which shows huge growth potential compared to the current ratio of only 2%.
Recently, the Hong Kong authorities have further proposed new measures to attract capital, suggesting that the scope of capital gains tax exemption be expanded to cover assets such as overseas real estate, carbon credits, private credit, virtual assets, etc., applicable to private equity funds and eligible single family office investment vehicles.
This move can not only reduce the tax burden of family offices, but also provide more motivation for international capital to explore virtual assets. With the dual support of tax incentives and legal protection, Hong Kong strives to build a stable investment environment. Compared with Singapore's flexible policies and Dubai's innovative experiments, Hong Kong's strategic layout is more sustainable and far-reaching. On this basis, Hong Kong will undoubtedly attract more and more international capital inflows, especially in the field of virtual assets, and become a key node in global capital allocation.
At the same time, Hong Kong's infrastructure construction is also constantly improving, providing strong support for participants in the virtual asset market. In this process, local virtual asset service agencies such as HashKey Exchange have played a vital role. As the largest compliant virtual asset exchange in Hong Kong, HashKey Exchange has currently reached cooperation with more than a dozen brokerages, banks and other financial institutions including ZhongAn Bank and Shengli Securities. In addition, dozens of medium and large enterprises have completed virtual asset services for their own funds at HashKey Exchange, providing a full range of solutions including account opening, investment, and trade settlement. At present, HashKey Exchange has more than 100 partners, further consolidating its core position in the Hong Kong virtual asset market.
It is worth noting that according to public information, the cumulative asset deposit of HashKey Exchange has exceeded HK$10 billion. This growth momentum shows the sharp rise in the market demand for compliant virtual asset services. Especially this year, companies from the traditional financial services industry, such as brokerages, banks, asset management institutions, listed companies and family offices, have opened virtual asset accounts. After obtaining the No. 1 license upgrade, many brokerages have joined hands with HashKey Exchange to use Omnibus brokerage business to provide brokerage users with virtual asset recharge, withdrawal and other services, which means that traders and investors behind these brokerages, especially Hong Kong stock investors, can directly enter the virtual asset market such as BTC and ETH through compliant channels.
With the support of these infrastructures, Hong Kong can provide strong guarantees for family offices to smoothly participate in virtual asset investment, reducing the complexities and obstacles in technology, compliance, risks, etc.
Virtual assets and the new order of family offices
Whether it is the institutionalization path formed by the launch of Bitcoin spot ETFs in the US market, or the dividends released by policy support and geographical convenience in Hong Kong, virtual assets are gradually occupying a more important position in family office asset allocation. Driven by the gradual institutionalization of the financial market 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 effective balance between innovation and compliance, while continuing to improve the infrastructure of the financial market. Professional virtual asset service platforms represented by HashKey Exchange can provide compliance support and technical guarantees for family offices to participate in virtual asset investment, reduce the complexity and risks of family offices entering the virtual asset field, and provide a more secure participation path for high-net-worth clients. The further development of this ecosystem will help Hong Kong occupy a more strategic position in the global wealth management landscape.
