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To recap briefly the rocky history of cryptoassets: ever since their arrival into the mainstream discourse surrounding investment strategies, cryptoassets have divided opinion. While advocates of crypto claim that their decentralised nature will usurp the established order of global financial markets and banking, others point to its volatility, links to financial crime and complex infrastructure and argue that this is neither desirable nor without legal, regulatory and technological challenges. In a few short years, crypto has expanded well beyond its early beginnings to encompass an enormous ecosystem that takes in decentralised finance (DeFi), NFTs, Web 3.0, the metaverse and more, with some investors generating extraordinary levels of wealth through savvy (or very lucky, depending on your point of view) bets on this new economy. Central banks across the world are harnessing blockchain technology to create central bank digital currencies, and despite the recent "crypto winter", institutional investors and crypto-native businesses alike are continuing to make significant investments into crypto and blockchain initiatives.
Family office participation and engagement with the world of cryptoassets could provide a potentially rich pool of investors for those creating opportunities in the burgeoning crypto space. Family offices have become increasingly popular over the past decades and current estimates suggest that total family office holdings are now larger than those of private entities. Generally, family offices are corporate entities established by high-net worth individuals or families to directly or indirectly manage their investments, to further their philanthropic goals and for succession planning purposes.
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However, of those surveyed who said they were more likely to invest in cryptoassets, 86% were next generation family office successors versus 14% of current generation leaders, suggesting that the appetite to invest in this space could remain strong as the next generation come into their own.
In addition, one might have expected the environmental challenges associated with cryptoassets that use the proof-of-work consensus mechanism (like Bitcoin and, for now, Ethereum) to be an obstacle for family offices who tend to be keen to invest ethically. Perhaps surprisingly, the report showed that only one in four family offices considered the energy-intensive crypto mining process to be a challenge they are dealing with. The majority took an optimistic tone as they considered that mining will become more environmentally friendly in the future.
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