Web3 Investment Strategies: The Role of Family Offices in Encryption Asset Allocation

In recent years, family offices have gradually evolved from exclusive asset management tools for elite circles to the core of asset governance for high-net-worth individuals. Especially with the rise of emerging investment fields such as Web3 and RWA, more and more investors are beginning to consider: are they suitable to participate in these emerging markets through family offices? How to build an appropriate structure? In the face of the high volatility and complexity of the encryption world, how should one formulate allocation strategies?

This article will explore from a practical perspective how family offices are established, used, and optimized as an investment avenue, focusing on answering the following three key questions:

1. Who is suitable to enter the Web3 field through family offices?
2. How to build a practical family office structure?
3. How should family offices develop and execute Web3 investment strategies?

Who is suitable for choosing the family office model?

Family offices are not suitable for everyone, and their core function is to manage complex asset structures.

If your assets are relatively concentrated, your trading frequency is low, and your investment path is simple (such as fixed income products, real estate, domestic funds, etc.), then the management capabilities of a family office may far exceed your actual needs, which may instead lead to a bulky structure and excessive costs.

However, if you belong to the following categories, a family office may be the only option that can simultaneously balance security, structure, and growth.

1. Large and complex asset scale: investable assets exceed ten million RMB and span multiple fields including equity, real estate, overseas funds, and digital assets, involving different currencies, accounts, and holding entities.

2. Cross-border structural requirements: including but not limited to overseas immigration, offshore company establishment, non-Chinese tax resident status, as well as overseas investment, identity planning, distribution of family members, and other situations.

3. Tend to invest in structured products: Fund-type Tokens, convertible bonds, income certificates, tokenized equity, and other new structured products in the Web3 field are increasingly open only to "qualified investors" or legal entities.

4. Long-term asset governance capability is needed: It is hoped to serve intergenerational inheritance and the continuation of family will through asset allocation, or to allocate RWA and other assets that require long-term management.

The common characteristic of these groups is: their asset allocation goal is not to pursue short-term gains, but to navigate through economic cycles; their investments are not purely speculative, but rather structurally participatory.

In this case, the governance structure of the family office is no longer just a symbol of identity, but has become a practical asset management tool.

How to Build a Practical Family Office?

Building a family office structure is not a one-size-fits-all process. Its core task is to solve practical problems. Many people understand the family office as starting with a service package purchased from a trust, law firm, or professional FO company. However, a truly effective family office must be tailored around the family structure, asset portfolio, and investment goals.

In the context of Web3, a practical family office needs to address at least the following four aspects:

1. Clearly define the purpose: Is it for tax optimization, cross-border identity configuration? Or is it to obtain project investment qualifications? Or to configure an encryption asset portfolio for the next generation? Defining the purpose is the starting point for structural design and resource allocation.

2. Choose the appropriate type:

   • SFO (Single Family Office): With a fund size of over 30 million RMB, can consider setting up an independent team with operational capabilities.
   • MFO (Multi-Family Office): With funds around 10 million RMB, it may be considered to collaborate with professional service institutions to provide management, compliance, investment research, and other services.
   • VFO (Virtual Family Office): The capital scale is insufficient to establish independently and can achieve lightweight operation through an outsourced network composed of law firms, trust institutions, and FAs.
   • Cross-border SFO (such as those established in Singapore): commonly used to address issues of identity, taxation, and investment channels, it is currently the most common choice for Chinese families.

3. Architecture and Legal Design: A typical family office structure usually includes:

   • Offshore holding entities (such as BVI/Cayman/SPV) for holding and investment.
   • Trust or fund structure for tax optimization and inheritance arrangement.
   • Legal advisors and compliance team for ongoing supervision and adjustments.
   • "Investment vehicle accounts" interfacing with Web3 projects, such as enterprise-level wallets, dedicated custody accounts, etc.

4. Professional resource allocation: It requires not only funding but also matching roles such as legal, tax, financial, and technical advisors to ensure compliance in structural operations and smooth investment implementation. Many family offices choose to establish entities in Singapore and set up financial collaboration teams domestically to form "internal and external interaction".

Building a family office can be divided into three levels:

Layer One: Identity and Structural Framework

• Clarify tax residency status, family member structure, and inheritance path.
• Establish domestic/foreign holding entities, trusts, or SPVs (depending on the type of assets and the location of holding).
• Solve the compliance path for asset holding, tax declaration, and cross-border circulation.

This layer is the "legal identity credential" for all Web3 investment activities. Especially when participating in overseas RWA projects, lacking this structure is equivalent to having no investment channel.

Layer Two: Governance Mechanism and Authorization System

• Establish a family governance mechanism (such as an investment committee, will, equity agreement).
• Establish an internal and external advisory system (division of roles in legal, tax, investment, management, etc.).
• Establish authorization mechanisms and supervision processes to ensure "someone is responsible, someone executes, and someone corrects."

This layer determines whether the family office is "operational". If all decisions rely on individuals, once an unexpected event occurs or someone exits, the family office becomes effectively non-functional.

Third Layer: Asset Allocation Strategy

• Set long-term allocation ratios (e.g., RWA 40%, VC 30%, digital assets 10%, cash and liquidity 20%).
• Match the lifecycle rhythms of various assets (construction period, lock-up period, exit period).
• Set up profit-taking and stop-loss mechanisms, and risk adjustment mechanisms.

This layer is the key to whether family offices can "survive" in the market.

How Family Offices Can Participate in Web3 Investments?

When we discuss "participating in Web3 through family offices," it is not just about switching accounts to invest in projects, but rather redefining your role, path, and strategy. Clearly defining the structure is just the starting point; the real core lies in "how to invest."

Web3 investment is characterized by high volatility, high technical barriers, and changing regulations, which must be addressed through "structured design".

Set Investment Identity

Web3 project identity integration usually includes:

• Direct Legal Entity (Company): Offshore company established by SFO to connect investment agreements.
• SPV Holding: Holding assets through a third-party SPV and controlling voting rights.
• Trust Beneficiary: Establishing a trust through a family office to hold Tokens or equity, facilitating tax optimization and intergenerational planning.

It is recommended that family offices cooperate with law firms and compliance institutions to establish identity in accordance with the legal system of the project's location, in order to avoid missing investment opportunities due to "non-qualifying entities."

match asset type

The types of Web3 assets suitable for family office allocation include:

• RWA (Real World Assets): such as tokenized bonds, real estate, income share agreements, etc.
• Structured Funds: such as yield Tokens, re-staking agreements, and yield certificates.
• Equity-type assets: such as convertible bond tokens, dividend tokens, DAO governance tokens, etc.

It is not advisable to participate in purely speculative projects that have "no real asset support, no governance structure, and no exit mechanism" in large proportions.

Set investment rhythm and risk management mechanism

The biggest difference between Web3 investment and traditional PE/VC lies in the uncertainty of the rhythm. Family offices should refer to the following mechanisms for allocation:

• Set the "acceptable lock-up period" and exit window.
• Design a "staged release" mechanism to release funds based on project progress.
• Configure the "Yield Reinvestment" pool to increase investment in quality projects.
• Clarify the rhythm of tax declaration and establish reporting and auditing mechanisms.

Governance Participation and Deep Collaboration

High-level family offices are not just investors:

• In RWA projects, family offices can serve roles such as auditors, governance representatives, custodians, and more.
• In the DAO, family offices can participate in governance through token staking and configure a "strategy wallet" for voting.
• In on-chain protocols, family offices can be embedded in collaborative processes as long-term LPs, trustees, and ecosystem collaborators.

This type of "embedded investment" not only enhances the certainty of returns but also makes it easier to form information advantages and reinvestment opportunities.

Common Misconceptions and Pitfall Advice

As Web3 enters deeper waters, investment is no longer a question of "whether to invest," but rather a question of "in what capacity and in what manner to invest."

A family office is a structural vehicle that can carry long-term governance capabilities, legal identity allocation, and asset flow paths. It allows investors to be not just bettors, but also structural designers, governance participants, and value depositors.

However, many newly established family offices tend to fall into the following misconceptions when engaging with Web3:

1. Misconception 1: Treating family offices as a cover Establishing a company without compliance pathways, financial flow, or tax disclosure ultimately makes it difficult to gain recognition from banks and regulators.

2. Misconception 2: Lack of investment governance capabilities Only one legal entity account is established, but there is no budget and redistribution mechanism, making it impossible to effectively track and adjust the final investment.

3. Misconception 3: Blindly pursuing profits while ignoring compliance boundaries. Participating in "unlicensed dividend-type projects" may lead to fund freezing or fines once regulatory intervention occurs.

Therefore, it is recommended that after establishing a family office, the following mechanisms should be formed at a minimum:

• Annual Investment Plan + Analysis Review
• Clear compliance review + audit mechanism
• Professional team equipped + Continuous legal advisory

Finally, it needs to be emphasized again that family offices are not suitable for everyone. They need to match the scale of funds, long-term willingness, and collaborative resources in order to truly be effective.

The key to deciding whether to pursue a family office path does not lie in "Do I have enough capital?" but rather in "Do I need a structure to undertake governance tasks across cycles?"

If the answer is affirmative, then the family office is not just a wealth container, but also a long-term base for your entry into structural investments in Web3.