Cryptocurrencies have become a popular alternative investment asset among family offices, according to the results of a survey conducted by BNY Mellon.
BNY Mellon Wealth Management's Global Family Office Survey, conducted in collaboration with Harris Poll, found that family offices are highly in tune with the cryptocurrencies, . According to their results, 75% of Family Offices surveyed have reported that they already interact with these digital assets. Of these, 72% stated that they already have investments in cryptocurrencies and that they plan to continue increasing their exposure to these digital assets in the future.
Rajesh Nakadi, Chief Investment Officer of BNY Mellon's Global Family Office, noted that family offices have a long-term investment horizon and are currently in a unique position to consider investing in cryptocurrencies as an emerging asset class with great potential.
“The regulatory climate continues to evolve and digital assets are emerging as unique vehicles for families to store wealth, offering the potential for higher returns and greater portfolio diversification.”, Nakadi said.
Although cryptocurrencies are becoming popular as an investment asset among family offices, the lack of clear regulation and volatility in the markets remain the main barriers to wider adoption. Family offices are also concerned about potential risks of hacking and financial crimes, BNY Mellon reported.
The bank has signed a partnership with blockchain analytics company Chainalysis to integrate its cryptocurrency tracking tools, in order to provide greater trust and security to its clients and investors.
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Huge appetite for cryptocurrencies in family offices
For 61% of Family Offices, cryptocurrencies represent the next generation of investments. More than half of family offices indicated that cryptoassets offer good investment opportunities, which has motivated them to incorporate these digital assets into their portfolios.
70% of those exploring and investing in cryptocurrencies also indicated that they want to keep up with new investment trends represented by digital assets; while 45% cited the interest that the next generation of Family Office successors maintains in these crypto assets. Based on these results, BNY Mellon Wealth Management noted that it is quite likely that the next generation of family investors will focus even more on the cryptocurrency industry and that they will delve into new protocols and investment instruments, such as those developed in the decentralized finance ecosystem (DeFi).
Family offices are the investment arm of high-net-worth families and have become the fastest-growing investment vehicles in the financial sector. The survey was conducted among 200 family offices in various countries around the world, of which 56 were single-family and 144 were multi-family, the bank explained. All of the family offices that participated in the BNY Mellon survey manage more than $150 million in assets.
Institutional DeFi
Decentralized protocols such as Aave and 1inch Network are developing initiatives to encourage institutional investors to enter the DeFi ecosystem. In December, 1inch raised $175 million from major investors to optimize its protocol and create new tools to provide new opportunities for its users and participants. Sergej Kunz, co-founder of 1inch, said that it will make the 1inch digital ecosystem attractive and favorable for both retail and institutional investors.
“The next $1 trillion of assets entering DeFi will come from institutions rather than retail users”, Kunz said.
Meanwhile, decentralized lending protocol Aave is also developing its own plan to attract the attention of institutional investors. Last month, the DeFi protocol partnered with digital asset custodian Fireblocks to ensure the safe entry of 30 regulated institutions into its DeFi ecosystem, through its institutional tool Aave Pro, announced last July.
Institutional Investors: MicroStrategy, One River and More
In the crypto industry, companies like MicroStrategy, Tesla, Square, One River, and more have been investing directly in cryptocurrencies over the past two years. In fact, MicroStrategy is the largest institutional investor in Bitcoin currently, with over 125.051 BTC on its balance sheet. Other investors, such as Clear Perspective Advisors, Ancora Advisors, Parkwood LLC, and Boston Private Wealth, have used Grayscale’s management funds to gain exposure to cryptocurrencies in an indirect way.
Although the price of Bitcoin fell after news of Russia's attack on Ukraine on Thursday, in the last few hours it has recovered nearly 5% of its value, which is why a significant part of institutional investors and family offices are supporting cryptocurrencies as a new class of emerging and alternative investment asset with great potential.
At press time, the price of BTC is $38.700, while the cryptocurrency market maintains a total capitalization of 1,79 trillions of dollars .
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