Web3 Investment Guide: How Family Offices Should Allocate Encryption Assets?

In recent years, family offices have gradually transformed from exclusive asset managers for elite circles into the asset governance control center for high-net-worth individuals. With the rise of emerging investment paths such as Web3 and RWA, more and more investors are beginning to ponder: are they suitable for participating in these fields through family offices? How can they build an appropriate structure? In the face of the high volatility and complexity of the encryption world, how should they formulate allocation strategies?

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

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

Who is suitable for adopting the family office approach?

Not everyone needs to establish a family office, as its core function is to serve the governance of complex assets.

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 governance capabilities of a family office may far exceed your actual needs, which may instead lead to a cumbersome structure and increased costs.

However, if you belong to any of the following categories, a family office may be the best choice that balances security, structure, and growth simultaneously:

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

2. There is a demand for cross-border architecture: including but not limited to overseas immigration, the establishment of offshore companies, non-Chinese tax resident status, as well as scenarios such as overseas investment, identity planning, and the global distribution of family members.

3. Preference for structured product investments: In the Web3 field, new structured products such as fund-type tokens, convertible bonds, income certificates, and tokenized equity are increasingly opened only to "qualified investors" or corporate entities.

4. Long-term asset governance capability is needed: We hope to serve intergenerational inheritance and continue the family will through asset allocation, or participate in long-term asset projects such as RWA that require a "construction period + operating period + exit period."

The common characteristic of these groups is that asset allocation is not for the pursuit of short-term gains, but to traverse the economic cycle; investment is not a single-point speculation, but a structural participation in the entire industry ecosystem. In this context, the governance structure of family offices is no longer a symbol of status, but a practical asset management tool.

How to Build a Practical Family Office?

The structure of a family office is not a one-size-fits-all solution; its core task is to address practical issues. Many people understand a family office as starting with a package of services purchased from trusts, law firms, or professional family office companies. However, a truly effective family office must be tailored around the family's structure, asset portfolio, and investment objectives.

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

1. Clearly establish the purpose

It is important to determine whether it is for tax optimization, cross-border identity configuration, to obtain investment qualifications for specific projects, or for planning the next generation's encryption asset portfolio. Clearly defining the purpose is the foundation for structural design and resource allocation.

2. Choose the appropriate type

• SFO (Single Family Office): Suitable for a capital scale of over 30 million RMB, it is advisable to consider building an independent team with the capability for autonomous operations.
• MFO (Multi-Family Office): Suitable for fund sizes around 10 million RMB, can cooperate with professional service institutions to provide management, compliance, research and investment services.
• VFO (Virtual Family Office): Suitable for situations where the capital scale is insufficient to establish independently, it can achieve lightweight operation through an outsourcing network composed of law firms, trust institutions, and financial advisors.
• Cross-border SFO (such as those established in Singapore): commonly used to address identity, tax, and investment channel issues, this is currently the most common option 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 planning
• Legal advisors and compliance team for ongoing monitoring and adjustments.
• "Investment Vehicle Accounts" that interface with Web3 projects, such as enterprise-level wallets, dedicated custody accounts, etc.

4. Professional Resource Allocation

In addition to funding, it is necessary to equip professional personnel such as legal, tax, financial, and technical advisors to ensure that the structure operates in compliance and that investments are smoothly implemented. Many family offices choose to establish entities in Singapore while setting up financial collaboration teams domestically, forming an "internal-external linkage" operational model.

How Family Offices Can Participate in Web3 Investments?

When we talk about "participating in Web3 through family offices", it is not just about switching accounts to invest in projects, but about redefining your role, path, and strategy. Clarifying 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, and must be addressed through "structured design."

Set investment identity

Web3 project identity integration typically includes:

• Direct Legal Entity (Company): Offshore company established by SFO to connect investment agreements.
• SPV Holdings: 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.

Family offices are advised to collaborate with law firms and compliance institutions to establish appropriate identities based on the legal system of the project's location, in order to avoid missing investment opportunities due to "ineligible entities."

match asset type

The types of Web3 assets suitable for family offices to allocate include:

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

It is not recommended to participate in purely speculative projects that "lack real asset support, governance structure, and exit mechanisms" 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 pace. 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.
• Set up a "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, roles such as auditor, governance representative, and custodian can be assumed.
• In the DAO, governance participation can be achieved through token staking, and a "strategy wallet" can be configured for voting.
• In on-chain protocols, can be embedded in the collaboration process as long-term LPs, delegators, and ecological 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 Avoidance Tips

As Web3 enters a deep water phase, the key to investment is no longer "whether to invest," but "in what capacity and in what manner to invest." A family office is a structural vehicle that can support long-term governance capabilities, legal identity allocation, and asset flow paths. It allows investors to not only be bettors but also to become 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. Treat the family office as a shell: establish a company without a compliance path, financial flow, or tax disclosure, ultimately making it difficult to gain recognition from banks and regulators.

2. Lack of investment governance ability: Only establishing a legal entity account without a budget and redistribution mechanism leads to investments being unable to be effectively tracked and adjusted.

3. Blindly pursuing profits while ignoring compliance boundaries: Participating in "unlicensed dividend projects" may lead to frozen funds or fines once regulators intervene.

Therefore, it is recommended to establish at least the following mechanisms after setting up a family office:

• Annual Investment Plan and Analysis Review
• Clear compliance review and audit mechanism
• Professional team equipped with ongoing legal advisory support

Finally, it is important to emphasize that family offices are not suitable for everyone. They require a sufficient scale of funds, a long-term investment willingness, and professional collaboration resources to truly function. The key to deciding whether to adopt the family office path is not "do I have enough funds," but rather "do I need a structure to undertake cross-cycle asset governance tasks."

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