Web3 Investment Advancement: Family Office Allocation Guide for Encryption Assets

In recent years, family offices have gradually evolved from exclusive asset management tools for elite circles to a central asset governance hub favored by high-net-worth individuals. Especially after the rise of emerging investment fields 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 to 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, used, and optimized as an investment pathway, focusing on answering the following three key questions:

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

Suitable Groups for Adopting the Family Office Path

Family offices are not suitable for everyone; their core value lies in managing complexity. If your assets are relatively concentrated, your trading frequency is low, and your investment paths are simple (such as fixed income products, real estate, domestic funds, etc.), the management capabilities of a family office may far exceed your actual needs, resulting in increased structure and costs.

However, for the following types of people, family offices are almost the only choice that can simultaneously take into account security, structure, and growth.

1. Large asset scale and complex structure: Investable assets exceed 10 million RMB, involving diversified investments such as equity, real estate, overseas funds, and digital assets, spanning different currencies, accounts, and holding entities.

2. There is a need for cross-border architecture: including overseas immigration, establishment of offshore companies, non-Chinese tax resident status, as well as overseas investment, identity planning, global distribution of family members, and other situations.

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

4. Long-term asset governance capability is required: the hope is to achieve intergenerational inheritance and continue the family's wishes through asset allocation, or to invest in RWA and other long-term assets that need to go through a "construction period + operation period + exit period."

The common characteristics of these groups are: the asset allocation goal is not short-term returns, but to traverse cycles; the investment strategy is not point speculation, but structural participation. In this case, the governance structure of family offices is no longer a symbol of identity, but a practical tool.

Building a Practical Family Office Structure

A practical family office structure is not one-size-fits-all; its core mission is to address real issues. A truly effective family office must be tailored to the family's structure, asset portfolio, and investment objectives.

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

1. Clearly establish the purpose

Is it for tax optimization, cross-border identity configuration? Or is it to obtain project investment qualifications? Or is it to configure an encryption asset portfolio for the next generation? Clarifying 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, it may consider building an independent team and has the ability to operate independently.
• MFO (Multi-Family Office): Suitable for a fund size of around 10 million RMB, can collaborate with professional service organizations to provide management, compliance, investment research, and other services.
• VFO (Virtual Family Office): Suitable for smaller funding scales, achieving lightweight operation through an outsourced network composed of law firms, trust institutions, and financial advisors.
• Cross-border SFOs (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) used 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 connect 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 consultants to ensure that the structure operates in compliance and that investments are successfully implemented. Many family offices choose to establish entities in Singapore and set up financial collaboration teams domestically, forming an "internal and external linkage" model.

Three Levels of Family Office

Building a family office can be roughly 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 (determined by asset type and 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 appropriate structure is equivalent to having no investment channel.

Second Layer: Governance Mechanism and Authorization System

• Determine the family governance mechanism (such as investment committee, will, equity agreement, etc.).
• Establish an internal and external consulting system (division of roles such as legal, tax, investment, management, etc.).
• Establish an authorization mechanism and supervision process to ensure that "someone is responsible, someone executes, and someone corrects."

This layer determines whether the family office is "operational". If everything relies on personal decisions, the family office will become ineffective once an unexpected event occurs or someone exits.

Layer Three: Asset Allocation Strategy

• Set long-term allocation ratios (e.g., RWA 40%, VC 30%, digital assets 10%, cash and liquidity 20%).
• Match the life cycle rhythm 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 in the long term.

Strategies for Family Offices to Participate in Web3 Investments

Participating in Web3 investments through family offices is not just about switching accounts for investment projects, but about reconstructing the roles, paths, and strategies of investment. Clarifying the structure is just the starting point; the core is in "how to invest".

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

Set Investment Identity

Web3 project identity integration usually includes:

• Direct legal entity (company): Offshore company established by SFO connects to 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 in accordance with the legal system of the project's location, in order to avoid missing investment opportunities due to "lack of qualified 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 share 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 advisable to participate in "purely speculative projects without real asset backing, governance structure, or 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 rhythm. Family offices should refer to the following mechanisms for allocation:

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

Governance Participation and Deep Collaboration

The advanced family office is not only a funder, but can also:

• Serve as an auditor, governance representative, custodian, and other roles in RWA projects.
• Participate in governance through token staking in the DAO, and configure the "strategy wallet" for voting.
• Embed collaboration processes as long-term LP, delegator, and ecosystem collaborator in on-chain protocols.

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

Common Misunderstandings and Pitfall Avoidance Suggestions

As Web3 enters deeper waters, the key to investment is no longer "whether to invest" but "in what capacity and how to invest." Family offices serve as a structural vehicle that can support long-term governance capabilities, lawful identity allocation, and asset mobility pathways. This allows investors to be more than just bettors; they become structural designers, governance participants, and value preservers.

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, without financial flow, and without tax disclosure, making it difficult to obtain recognition from banks and regulators in the end.

2. Lack of investment governance capacity: Only a legal entity account is established, but there is no budget and redistribution mechanism, resulting in the inability to effectively track and adjust the final investment.

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

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

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

It is worth emphasizing again that family offices are not suitable for everyone. They need to match the scale of funds, long-term willingness, and collaborative resources to truly be effective.

The key to deciding whether to adopt a family office path 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 the family office is not only a wealth container but also a long-term base for entering structural investments in Web3.