Web3 Investment and Family Offices: A Tool for Building Structured Asset Allocation

In recent years, family offices have gradually evolved from being an asset management tool for the elite circle to becoming an asset governance center for high-net-worth individuals. With the rise of emerging investment fields such as Web3 and RWA, more and more investors are beginning to contemplate: Is it suitable for them to participate in these investments through a family office? How to establish an appropriate structure? In the face of the high volatility and complexity of the crypto world, how should they formulate investment strategies and execution plans?

This article will delve into how family offices are established, utilized, and optimized as a means of investment from a practical operational perspective, with a focus on answering the following three key questions:

1. Who is suitable for entering the Web3 space through family offices?
2. How to build a practical and effective family office structure?
3. How should family offices formulate and implement Web3 investment strategies?

Who is suitable for adopting the family office model?

Family offices are not suitable for everyone; their core function is to provide solutions for "complex asset management."

If your assets are relatively concentrated, your trading frequency is low, and your investment channels 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, potentially leading to structural redundancy and increased costs.

However, if you meet the following categories of situations, a family office may be the only option that balances security, structure, and growth.

1. Large and complex asset scale: investable assets exceed ten million RMB, involving diversified investments such as equity, real estate, overseas funds, digital assets, and may also include different currencies, accounts, and holding entities.

2. Need for cross-border structure: Involves overseas immigration, offshore companies, non-China tax resident status, or needs related to overseas investments, identity planning, family member distribution, etc.

3. Preference for structured product investments: Interested in new structured products in Web3 such as fund-type tokens, convertible bonds, income certificates, and tokenized equity, which are typically open only to "qualified investors" or legal entities.

4. Need for long-term asset management capabilities: Hope to achieve intergenerational inheritance and continue family ideals through asset allocation, or invest in RWA and other assets that require long-term management.

The common characteristic of these groups is that their asset management goal is not to pursue short-term gains, but to navigate through economic cycles; their investment is not merely speculative behavior, but structural market participation.

In this context, the governance structure of family offices is no longer just a status symbol, 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 family offices only as purchasing service packages from trust companies, law firms, or professional family office companies. 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 aspects:

1. Clearly define the purpose: Is it for tax optimization, cross-border identity configuration, or to obtain project investment qualifications? Or is it for planning a cryptocurrency asset portfolio for the next generation? Clearly defining the purpose is the starting point 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, considering building an independent team with autonomous operational capabilities.
   • MFO (Multi-Family Office): Suitable for a capital scale of around 10 million RMB, can collaborate with professional service organizations to provide management, compliance, research, and other services.
   • VFO (Virtual Family Office): Suitable for smaller capital scales, which can achieve lightweight operations through an outsourced network composed of law firms, trust institutions, and financial advisors.
   • Cross-border SFO (such as those established in Singapore): commonly used to address issues related to identity, taxation, and investment channels, and 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 arrangements.
   • Legal advisors and compliance teams 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 capital, it is also necessary to equip professional talents such as legal, tax, financial, and technical advisors to ensure compliance in structural operations and smooth investment execution. 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:

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 their location).
• 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, the lack of a suitable structure is equivalent to "no 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 consulting system (division of roles in legal, tax, investment, management, etc.).
• Establish an authorization mechanism and supervision process to ensure that "someone is responsible, someone executes, and someone corrects mistakes."

This layer determines whether the family office is "operational". If all decisions rely on individuals, the family office will become ineffective once an unexpected event occurs or if someone exits.

Third Layer: Asset Allocation Strategy

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

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

How Family Offices Can Participate in Web3 Investments?

Participating in Web3 through family offices 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 usually includes:

• Direct Legal Entity (Company): An offshore company established by SFO connecting to the investment agreement.
• SPV Holdings: Holding assets through a third-party SPV and controlling voting rights.
• Trust beneficiaries: Establishing 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 institutions to establish identity based on the legal system of the project 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 agreements, yield certificates, etc.
• 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 backing, 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 rhythm. Family offices should refer to the following mechanisms for allocation:

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

Governance Participation and Deep Collaboration

A high-end family office is more than just an investor:

• 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 "strategic 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 informational advantages and reinvestment opportunities.

Common Misconceptions and Pitfalls Advice

As Web3 enters the deep waters, the key to investment is no longer "whether to invest" but "in what capacity and in what manner to invest."

Family offices are a structural vehicle that can carry long-term governance capabilities, legal identity configuration, and asset flow pathways. They enable investors to be more than just bettors; they become structural designers, governance participants, and value depositors.

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

1. Misunderstanding 1: Treating a family office as a shell company Establishing a company but lacking compliance pathways, financial processes, and tax disclosures ultimately makes it difficult to gain recognition from banks and regulatory authorities.

2. Misconception 2: Lack of investment governance capabilities Only establishing a legal entity account, but lacking a budget and redistribution mechanism, leads to investments being unable to be effectively tracked and adjusted.

3. Misconception 3: Blindly pursuing profits while ignoring compliance boundaries. Participating in "unlicensed dividend-type projects" may lead to fund freezes 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 consulting

Once again, it is emphasized that family offices are not suitable for everyone. They require alignment with the scale of funds, long-term strategies, and collaborative resources to truly be effective.

The key to deciding whether to adopt a 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 affirmative, then the family office is not only a container of wealth but also a long-term base for your structural investments in Web3.