While the broader market of private investors may still have reservations about cryptocurrencies, some of Asia’s wealthiest and most prominent families are increasingly adding exposure to the digital asset class.

2022 has not been a year for mass promotion of cryptocurrencies. The downfall of various tokens and companies such as TerraUSD or Three Arrows has undoubtedly hit the confidence of many investors. Regulators have applied caution when approaching the digital asset class with many exploring or opting to tighten rules, especially for retail users.

But amongst wealthy individuals and families – especially in the top echelons of Asia – there are signs of further adoption amid historically lower market levels with a handful of high-profile examples in 2022.

Demand at the Very Top

In March prior to the collapse of stablecoin TerraUSD, property tycoon and New World Development chief executive Adrian Cheng announced that he had taken part in the $88 million funding round of Hong Kong-based crypto custodian Hex Trust through his venture capital firm C Ventures which also invested in Singapore crypto firm Matrixport last year.

But even after the market was hit by a series of negative headlines and mass de-risking, others were seeking entry. In August, one of Thailand’s richest and Gulf Energy Development CEO Sarath Ratanavadi announced ambitions to boost blockchain ecosystem investments with plans to seek a license to operate a digital asset exchange and brokerage partnership with crypto giant Binance. 

And just last week, Singaporean elites also joined the party with Whampoa Group announcing plans to raise $50 million for a crypto-related hedge fund and deploy $100 million for a venture capital fund in the same space. The multi-family office was co-founded by Lee Han Shih, a member of the family that founded OCBC, and Amy Lee, niece of Singapore’s first Prime Minister Lee Kuan Yew.

Big Money Leads

Even among high net worth individuals (HNWI), mass adoption remains elusive. According to a recent study by Lombard Odier, just 17 percent of high net worth individuals (HNWI) have more than 5 percent of their portfolios allocated to cryptocurrencies with 20 percent looking to increase weightings.  

Although this may appear to be a relatively low figure, it could represent exponentially larger proportions depending on the size of respondents' wealth. According to Capgemini, Asia is home to 7.2 million HNWIs with a total wealth of over $25 trillion. But the region’s 50 richest families alone represent 2.7 percent of this total with $700 billion of wealth, according to Forbes data. 

«Some of the bigger family offices are trying, they're exploring and they want advice on [cryptocurrencies],» said J.P Morgan Private Bank’s head of Hong Kong and the Philippines Paul Thompson in a panel last month. «From a firm perspective, we're kind of figuring out what our offering should be. It’s a challenging area to give advice on, especially if you're a private bank.»

Recovery Since June?

As early as June, there were signs that investors were returning, with J.P. Morgan strategists including Nikolaos Panigirtzoglou underlining that the deleveraging cycle could be nearing its end, evidenced by shrinking net leverage at crypto firms. Volumes on DBS’s digital exchange (for institutional and accredited investors only) doubled in the month, compared to April, with buy orders accounting for 90 percent of trades and the client base growing 10 percent.

And this time around, even crypto bears are approaching the digital asset class with a different tone. While HSBC CEO Noel Quinn insisted that there were continued concerns about crypto volatility and suitability for clients, he avoided the past errors of J.P. Morgan CEO Jamie Dimon by refusing to forecast its final outcome.

«I'm not going to predict where it will go in the future,» he said.