After fueling the SPAC boom, the super-rich are now turning to cryptocurrencies

In a recent survey by the bank, 15% of respondents (including responses from more than 150 family offices around the world) have already invested in cryptocurrencies. Another 45% are interested in entering the space as a hedge against "higher inflation, prolonged low interest rates, and other macroeconomic developments following a year of unprecedented global monetary and fiscal stimulus."

Interest from family offices shows that high-net-worth individuals are becoming a force across multiple markets. Of the firms surveyed, 22% manage $5 billion or more in assets, and 45% oversee $1 billion to $4.9 billion.

Some family offices have long been investors in private equity and real estate but have recently become one of the biggest drivers of the boom in special purpose acquisition companies, or SPACs. Like that phenomenon, the cryptocurrency frenzy of the past year has attracted mainstream financial institutions, athletes and celebrities.

Critics are also pushing for more regulation as family offices grow in size and influence, especially after the collapse of Bill Hwang’s Archegos Capital Management left banks with billions of dollars in losses. Respondents in the survey also expressed interest in investing in the “digital asset ecosystem.”

Meena Flynn, who helps lead Goldman Sachs Private Wealth Management, said most family funds want to talk to us about "blockchain and digital ledger technology." There are many who believe that "this technology will have as much impact as the internet from an efficiency and productivity perspective. From an efficiency and productivity perspective, this technology will have as much impact as the internet."

However, other survey respondents said they still have underlying concerns about the long-term value of digital currencies, despite the financial industry’s recent embrace of cryptocurrencies and emerging blockchain technology.

Family offices have proliferated since the turn of the century, driven in part by a sharp rise in the number of tech billionaires. According to Analysys International, there are more than 10,000 family offices around the world that manage a family’s wealth, at least half of which started in the century. Research firm Campden Wealth estimated in 2019 that the value of family office assets worldwide was close to $6 trillion.

With assets of almost $6 trillion worldwide, it is larger than the entire hedge fund industry.

The firms vary significantly in size. Some manage hundreds of millions of dollars in assets, while others oversee the fortunes of billionaires like Sergey Brin and Jeff Bezos.

Many choose obscure names and operate out of the public eye. Bayshore Global Management, the family office of Alphabet Inc. founder Sergey Brin, is named after the location of its headquarters. Charles and David Koch named their firm after the year their grandfather immigrated to the U.S.: 1888.

The number of super-rich individuals has also surged in Asia, with China’s Jack Ma and real estate billionaire Wu Yajun both establishing family offices in the past decade, while super-rich individuals outside Asia, including Bridgewater Associates founder Ray Dalio, are increasingly setting up branches of their family offices in the region.