- Family offices are hopping on the bitcoin bandwagon, per a new survey.
- Twenty percent were active crypto investors, and another third were considering it.
- The uber-rich are betting on crypto to stay current and follow the lead of Millennial heirs.
Crypto is no longer a niche investment for the uber-rich, with 20% of family offices actively investing in cryptocurrencies, according to a new survey by BNY Mellon Wealth Management conducted with The Harris Poll.
Another 23% said they had limited exposure to crypto, while a third reported they were “exploring” investing in crypto. Just under a quarter said they had no exposure or interest in the asset class.
The survey, conducted in late 2021, included 200 family offices, managing at least $150 million in assets. Fifty six were single-family offices and 144 were multi-family offices. Half were based in the U.S.
It’s a marked shift for family offices, which are typically more conservative than institutional investors when it comes to portfolio strategy. Traditionally, family offices shunned highly volatile assets such as crypto with the goal of wealth preservation, not maximizing returns. A survey conducted by Fidelity in late 2020 through spring 2021 found that 47% of family offices held investments in digital assets, up from 19% the year prior.
But family offices that passed on earlier opportunities to capitalize on crypto don’t want to miss the boat again, according to Pat LaVecchia, CEO of digital-securities broker-dealer Oasis Pro Markets. One family office told him it had declined to invest in Coinbase six years ago when it was valued at only $415 million. Now it has a market capitalization of roughly $40 billion.
“They thought crypto seemed like a scam. They didn’t understand it,” LaVecchia told Insider in May. “Now they wish they had made that investment.”
Young heirs are pushing family offices to take a bet on bitcoin
The influence of young heirs has also inspired family offices to invest, as 45% of respondents said next-generation heirs were interested in cryptocurrency.
This corresponds with how Millennials and Gen-Z are leading the charge with crypto. In a survey of 2,000 US adults from Blockchain Capital conducted in late 2020, 46% and 55% of millennial and Gen Z respondents, respectively, said they planned to buy bitcoin in the next five years.
According to the BNY Mellon survey, the most popular reason (70%) cited for investing in crypto was to keep up with new investment trends. Just under half said crypto was a good investment opportunity. Fewer than a third cited low interest rates or inflation concerns as a reason to invest.
Despite their enthusiasm, family offices with any level of investment in crypto had widespread concerns about regulation (61%) and high
Bitcoin ETFs are more popular than crypto startups for investment
Family offices that described themselves as active investors plan to double down on crypto with 72% planning to increase their holdings. Those with limited exposure were much more conservative with only 22% interested in investing more.
Surprisingly, family offices preferred widely available methods for investing over those limited to accredited investors, with 61% using futures-based crypto ETFs such as Greyscale Bitcoin Trust. The second most-popular option (59%) was digital-currency exchanges such as Coinbase. Another 42% owned crypto directly in cold wallets. The least popular were investments in crypto startups (28%) and private placements (22%).
Though crypto is no longer a fringe investment for family offices, they are dipping their toes, not diving in. LaVecchia said they are generally cautious in their portfolio strategy, and lean towards the most popular cryptocurrencies, bitcoin and ethereum.
“Is it a 50% allocation? No. Is it a 5% allocation? Maybe,” he said.