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 the Harris Poll, found that family offices are highly in tune with cryptocurrencies. According to your results, 75% of the Family Office 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 the Global Family Office at BNY Mellon, 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 of 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 specified.
Although cryptocurrencies are becoming popular as an investment asset among family offices, the lack of clear regulation and the volatility in the markets continue to be the main barriers to further adoption. Family offices are also concerned about the potential risks of hacking and financial crime, the BNY Mellon reported.
The bank has signed an alliance with the blockchain analysis company Chainalysis to integrate its cryptocurrency tracking tools, in order to provide greater confidence and security to its clients and investors.
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Huge appetite for cryptocurrencies in the Family Office
For 61% of Family Offices, cryptocurrencies represent the new generation of investments. More than half of the family offices indicated that crypto assets provide good investment opportunities, which has motivated them to incorporate these digital assets into their portfolios.
70% of those who explore and invest 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 hold in these crypto assets. Based on these results, the 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 delve into new investment protocols and instruments, such as those being 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 applied to 200 family offices in various countries around the world, of which 56 were single-family and 144 multi-family, the bank explained. All of the Family Offices that participated in the BNY Mellon survey manage more than $150 million in assets.
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 bring new opportunities to its users and participants. Sergej Kunz, co-founder of 1inch, said that he will make 1inch’s digital ecosystem attractive and favorable for both individual and institutional investors.
“The Next $1 Trillion Of Assets Coming Into DeFi Will Come From Institutions Rather Than Retail Users”Kunz said.
For its part, the 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 in the last two years. In fact, MicroStrategy is the largest institutional investor in Bitcoin today, with over 125,051 BTC on their balance sheets. 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 a roundabout way.
Although the price of Bitcoin fell after learning of Russia’s attack on Ukraine this Thursday, in the last few hours it has recovered about 5% of its value, which is why an important part of institutional investors and family offices support cryptocurrencies as a new emerging and alternative investment asset class with great potential.
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