Cryptocurrencies attract family offices as the sector becomes more mainstream

Growing interest in crypto-currencies from family offices – and a fear of losing out – is steadily pushing advisors into the sector.

Crypto prices have reacted strongly with bitcoin trading at $13,184 on October 28, close to its highest level since a price spike of $19,760 in 2017.

Analysts at JP Morgan have started to argue that bitcoin will become seen as a better safe haven than gold, particularly among younger investors. As recently as 2017, its chief executive Jamie Dimon called bitcoin a “fraud”.

In the US, Two Ocean Trust has been authorised by the Wyoming Division of Banking to let family offices use trust structures to invest in digital assets. Two Ocean’s lawyer McDermott, Will & Emery says Wyoming’s crypto custody is now on a par with other financial assets. 

Wyoming is popular with family offices due to legal rulings, a zero rate of income tax and low sales taxes. In September, Kraken Financial obtained a licence from the state to become the first US bank to exchange digital assets. 

Wyoming’s moves will put intense pressure on other providers to move on crypto-currency.

DBS, the largest bank in South East Asia, has announced plans to develop a crypto exchange in Singapore, itself determined to attract family offices. 

JP Morgan has launched a division called Onyx for crypto services following the early adoption for its own digital currency by tech firms. 

PayPal has launched a crypto-currency option for payment processing. The Johnson family is developing crypto custody and fund services at asset manager Fidelity, noting a steady growth of interest as companies like Square and MicroStrategy start to use it in their reserves.

Bitcoin Suisse, a Swiss crypto pioneer, is willing to lend fiat currencies secured on crypto. The Canton of Zug will accept tax payments in cryptocurrencies from the start of next year.