Web3 Investment Guide: How Family Offices Allocate Encryption Assets

In recent years, family offices have gradually evolved from exclusive asset managers for the elite to the governance hub for high-net-worth individuals' assets. Especially with the rise of emerging investment fields like Web3 and RWA, more and more investors are beginning to consider: is it suitable for them to participate in investments through family offices? How to build such a structure? In the face of the high volatility and complexity of the encryption world, how should investment strategies and execution paths be formulated?

This article will explore, from a practical perspective, the establishment, use, and optimization methods of family offices as investment tools, focusing on answering three core questions:

1. Who is suitable for adopting the family office model to enter Web3?
2. How to build a practical family office structure?
3. How should family offices formulate and implement Web3 investment strategies?

Who is suitable for choosing the family office model?

The essence of a family office is to serve the governance of complex assets. Not everyone needs such a structure. If your assets are relatively concentrated, trading frequency is low, and investment paths are 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, leading to a cumbersome structure and increased costs.

However, for the following categories of people, family offices are almost the only option that can balance security, structure, and growth.

1. The asset scale is large and the structure is complex: 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 need for cross-border architecture: including 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. Preference for structured investment products: Fund-type tokens, convertible bonds, income certificates, tokenized equity, and other new structured products in the Web3 field are typically only open to "qualified investors" or legal entities.

4. The need for long-term asset governance capabilities: We hope to achieve intergenerational inheritance and continue the family will through asset allocation, or invest in asset classes such as RWA that require long-term planning.

The common characteristic of these groups is that their asset management goals are not to pursue short-term gains, but to traverse economic cycles; investment strategies are not based on single-point speculation, but on structural participation. In this context, the governance structure of family offices is no longer a symbol of identity, but a practical management tool.

How to Build a Practical Family Office?

The structural design of a family office is not fixed; its core task is to solve practical problems. Many people understand a family office as purchasing a service package from a trust company, law firm, or professional FO company. However, a truly effective family office must be tailored to the family's structure, asset portfolio, and investment goals.

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

clearly establish purpose

Are you looking for tax optimization, cross-border identity configuration? Or to obtain investment qualifications for specific projects? Or to plan a portfolio of encryption assets for the next generation? Defining the purpose is the starting point for structural design and resource allocation.

Select the appropriate type

• SFO (Single Family Office): Suitable for a fund size of over 30 million RMB, it is recommended to establish an independent team with self-operating capabilities.
• MFO (Multi-Family Office): Suitable for a capital scale of around 10 million RMB, can collaborate with professional service institutions to provide management, compliance, investment research, and other services.
• VFO (Virtual Family Office): Suitable for situations with smaller capital scale, it can achieve lightweight operations through an outsourced network composed of law firms, trust institutions, and financial advisors.
• Cross-border SFO (such as established in Singapore): commonly used to address identity, tax, and investment channel issues, it is currently the most common choice for Chinese families.

Architecture and Legal Design

A typical family office structure usually includes:

• Offshore holding entities (such as BVI/Cayman/SPV) used for holding and investment.
• Trust or fund structure for tax optimization and inheritance arrangements.
• Legal advisors and compliance team, responsible for ongoing monitoring and adjustments.
• "Investment carrier accounts" for integration with Web3 projects, such as enterprise wallets and dedicated custody accounts.

Configure professional resources

The operation of a family office not only requires funding but also needs to match professional roles such as legal, tax, financial, and technical advisors to ensure that the structure operates compliantly and investments are implemented smoothly. Many family offices choose to establish entities in Singapore while setting up financial collaboration teams domestically, forming a model of "internal and external linkage."

Building a family office can be divided into three levels:

1. Identity and Structural Framework:

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

2. Governance Mechanism and Authorization System:

   • Establish a family council mechanism (such as an investment committee, will, equity agreement).
   • Establish an internal and external consultant system (division of roles in law, taxation, investment, management, etc.).
   • Establish an authorization mechanism and supervision process to ensure clear responsibilities, effective execution, and proper corrections.

3. Asset Allocation Strategy:

   • Set long-term allocation ratios (e.g., RWA 40%, VC category 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, risk adjustment mechanisms.

How Family Offices Can Participate in Web3 Investments?

Participating in Web3 investments through family offices is not just about changing an investment account, but redefining your role, path, and strategy. Clarifying the structure is only 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): An offshore company established by SFO connects to the investment agreement.
• SPV Holdings: Holding assets through a third-party SPV and controlling voting rights.
• Trust Beneficiary: Establish a trust through a family office to hold tokens or equity, facilitating tax optimization and intergenerational planning.

It is recommended that family offices collaborate with law firms and compliance agencies to establish 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-like 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 is 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 funding" mechanism to release funds based on project progress.
• Configure the "Yield Reinvestment" pool to add investments to high-quality projects.
• Clarify the rhythm of tax declarations and establish reporting and auditing mechanisms.

Governance Participation and Deep Collaboration

High-level family offices are not just investors:

• In the RWA project, roles such as auditor, governance representative, custodian, etc. can be assumed.
• In the DAO, governance can be participated in through token staking, configuring a "strategy wallet" for voting.
• In on-chain protocols, can be embedded in collaborative processes as long-term LPs, delegators, and ecosystem collaborators.

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

Common Misconceptions and Suggestions

As Web3 enters deeper waters, the key to investment is no longer "whether to invest," but rather "in what capacity and in what manner to invest." A family office is precisely a structural vehicle that can carry long-term governance capabilities, legitimate identity configurations, and asset flow paths. It allows investors to be not only betters but also structural designers, governance participants, and value depositors.

However, many newly established family offices fall into the following misconceptions when approaching Web3:

1. Treat the family office as a shell: set up a company but lack compliance pathways, financial processes, and tax disclosures, ultimately making it difficult to gain recognition from banks and regulators.

2. Lack of investment governance capability: Only establishing a legal entity account without a budget and redistribution mechanism leads to ineffective tracking and adjustment of investments.

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

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

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

Lastly, it is important to emphasize that family offices are not suitable for everyone. They require matching funding scale, long-term strategy, and collaborative resources to truly work effectively. The key to deciding whether to adopt the family office model is not "do I have enough funds?", but rather "do I need a structure to undertake cross-cycle governance tasks?" If the answer is yes, then family offices are not only wealth containers but also a long-term base for entering structural investments in Web3.