Family Offices and Allocators: Moving From Observation to Allocation | EBC12

Thank you for the introduction. As he said, I am Peter Lane. I am the founder of a company called Bitcoin Life, and fortunately, yesterday we received final approval to operate in the Bitcoin life insurance business. So we'll be launching that in the coming weeks, which I think ties in quite well with how family offices are using structures to pass their bitcoins to heirs without losing a significant portion to inheritance tax. Great panel today.

I've talked to the guys before, so we know we'll have good answers for you. I hope you'll join in with your questions. But shouldn't we take turns introducing ourselves so we know who's who? Should I start first Should I start first ? First, congratulations on the permission you just received.

I got one about 2 years ago in Monaco, where I'm based in Monaco, where I'm based , and it's a real achievement. Hello, Filippo Bionduri. Multi-family office. I am based in Monaco. My brother is based in Singapore and my family owns this platform.

Singapore and Monaco, SGMC— company name. Thank you. Greetings to everyone. My name is Sasha Fuchs. I work at a 100% 100% family-owned private bank located in Liechtenstein.

We have a MiCA license as well as a custodial storage license. I built the digital assets business there and I'm very happy to be here today. Hello everyone. I am Viktor Chernev. I work at General Tensor.

We develop and acquire decentralized, open-source AI solutions and allocate capital in this area. That's what family office investments need, right? Perfectly. So, where do we start? I always get these questions about family offices.

Overall, there is a very wide range of family offices. These may be people who act quite aggressively and want to grow their assets very quickly. And if this is, say, the fifth generation, then it all comes down to how to save that money. This is a very interesting dynamic, which I believe which I believe any advisor should be able to navigate. And I think it also depends a lot on who in the family takes an active role in saying, "Here's what we want to look for."

And that's why, Sasha, you are a great example, because your bank works with a huge number of family offices. Are they starting to invest in Bitcoin, or, say, cryptocurrency or digital assets? And if so, who is the driving force behind this within the family office? It's the investment advisors investment advisors who manage the family office portfolio, or the people in the family who say, " the family who say, " Well, this is the direction we want to go. Is there anything we can do?"

I would say it's both . We see, I mean we started our crypto started our crypto business 6 years ago when everything was considered a scam and a bubble and nobody wanted to deal with it. And now we see that Bitcoin, in particular, has become part of the asset allocation in the portfolios managed by almost all representatives of hereditary wealth hereditary wealth . Of course, especially young people, because they see the future in this . But we are seeing that even the older generation sees this as potential " this as potential " digital gold" or something like that, as they themselves explain it.

And we see that Bitcoin currently occupies a certain portion of their asset allocation. However, we are concerned with preserving, not maximizing, wealth at this point. Filippo, you obviously play an active role in managing your business and your foundation. What do you pay attention to? Because one of the questions that arises is: are we moving from observation to allocation of funds?

What triggers are you looking for in an asset class? Not just in cryptocurrency, but to say, "Okay, we're fine with that, but for us to invest, the asset has to meet this, this, and this criteria." So and this criteria." So , what are these things that you consider? Thank you.

This actually relates to the question you just asked Sasha. Who are you? Who do you want? Who makes the decision? This is part of the process of analyzing and implementing asset allocation, as well as what we are talking about today - talking about today - blockchain and digital assets.

digital assets. First, there is a phrase I can confidently say about family offices: none of them are alike . You touched on this and answered this question. Who decides? You said—the You said—the youngest generation youngest generation .

I'm probably the least young person even on this panel. on this panel. Anyway, it's " Anyway, it's " Least Youngest"—it's such a great way to say "oldest." And who decides, who has power, and who allocates assets really determines the outcome of the entire investment portfolio. And also how much money you will get and how risky it is in the end, because the perception is completely different.

You asked about who makes the decisions. This decision is not about investing. Investing, holding, exiting assets. And the perception assets. And the perception , the feeling that you have, is not an institution; at least the family offices I work with are not institutions in the sense that they are not regulated.

They do what they want, within their own rules, which they have written down, if they have written down at all, or which they have agreed upon within the family. So the idea of ​​what they want and the documentation of their desires effectively dictate everything that remains. And volatility is never a problem, because quite often they say, "Oh, it's too volatile." You can make a lot of money, but it's volatile. Volatility is not a problem.

It's a real question of where the funds are going in terms of asset allocation and what you consider long-term investing. Yes, Victor, do you want to add anything? Well, I think if you talk about it from the other side of the equation, in terms of approaching a family office—in my experience, I've mostly been on the other side in approaching them. I think, especially with cryptocurrency, one of the problems we face is that at the highest level it is understood mostly as a commodity. I think the Bitcoin narrative for a family office is a lot easier to sell than saying, “Okay, let’s invest in something extreme,” like my like my meme coin or even my own DeFi project, right?

That's a whole other part of the equation. And I think part of the challenge here is: How do you create something with an element of risk and reward in mind for what you're getting? While I believe the risk and reward in Bitcoin, yes, carries more risk than, say, Treasury bills or even high-yield emerging market bonds, it also has a fundamental knowledge and understanding of the liquidity associated with it that smaller projects may not have. So, I think it's largely management across the broader spectrum, and then of course structuring the deal in a way that gives you an asymmetric return; but where is that possible, where can you hedge against a decline to make sure that it's offset and has those more traditional cash flows associated with them? Yes, I think that's the point .

When you're dealing with multiple people within a single family, the decision-making group can range from a grandfather in his 80s who loves real estate and gold, to someone in their 20s who may eventually become the guardian of the family's wealth. It's such a different mindset, and I think a lot of the older investors I talk to basically base their investment strategy on Benjamin Graham's book The Benjamin Graham's book The Intelligent Investor and the example of Warren Buffett. And then young investors appear who say investors appear who say : we only want cryptocurrency. And where can they reach an agreement? How, in your opinion, Sasha, can you become a mediator in this, to say: well , at what stage are you now as a family?

Or maybe they end up just setting aside a portion and saying, a portion and saying, okay, run this part yourself, and it could be your legacy, which you could lose. That's a good question, and I would answer along the same lines as last time. I think they are closing this gap more and more slowly. If 5 or 6 years ago there was no chance at all to invest in Bitcoin or crypto, now it looks like: hey, let's start with some of our capital. We saw capital.

We saw that you were right about your opinion about Bitcoin and crypto. So let's start with something . You mentioned meme coins and other things. We're not there yet, or anything like that. This is actually, in my opinion, Bitcoin.

Maybe they're talking about Ethereum now. It's the same with others. What is the value of this token? Why should I invest in it? Why should it be in my briefcase?

And, of course, the market wasn't the best, if you look at Bitcoin's performance over the last month. So why was it worth investing now? Is it time to invest in it again? Can I earn income from it? And so on.

Then the next question arises. But next question arises. But , in my opinion, the gap is narrowing. They want to invest some of their wealth just in case, because it might turn out to be the right decision. And this is exactly what decision.

And this is exactly what we see in practice, yes. Do you mind if I... Let me continue. First of all, I completely agree. And secondly, I have the honor of talking to people who are at least 80 years old.

And they are sometimes even smarter than me. This is not difficult to achieve, as you, of course to achieve, as you, of course , understand. But they are willing to share their experience with others. I think what Sasha just said is key. But first you need to understand what you are investing in.

And these two days have become evidence of the need to know what you are investing in, from all the angles that we have discussed today. And have discussed today. And secondly, be prepared for any level of pain: good, average, or bad. Because again, if you know what you're investing in, and you know the reasons, and you even know what you don't know, you're ready to have the conversation. The objection, and I will dwell on this regarding some digital currencies in family offices, is usually the lack of history and correlation patterns.

But if you know this and take it into account, the conversation is different. They are not against the asset class itself. I think it comes down to what your investment time horizon is, because you said volatility is a real thing, right? But if you are investing for 6 months, that is a problem. If you invest for 60 years, this is much less of a problem.

You and I were on the phone a few weeks ago, and you said a great thing about when you're talking to an investor and they say, "Well, our horizon is a generation." This means: "We can withstand any volatility." And if you have that long-term mindset, how willing are you to invest in something you understand a little less, like looking at the spectrum of digital assets? You have Bitcoin, which I think is the digital gold of today, right? And then there are other cryptocurrencies, which I see as a " " tech stocks vs.

gold" situation. So, I don't know, if you had asked me in 2000 what tech stocks would be the best in 2025? I probably wouldn't be able to tell you. If you were to ask, "Will gold be a store of value?" I would answer: "Yes."

And I believe we are now at the point where Bitcoin will be a store of value in 25 years. Other cryptocurrencies will probably change the world in one way or another , but you don't know for sure which ones will do it in 25 years. So, what is your willingness to invest in the full range of digital assets, knowing this? Well, I think if you take an example from 2000 onwards—I read about this recently—if you had a weighted average basket of all the top tech companies in 1999, your portfolio would be a loser today because most of them have actually crashed, except for a few winners like Amazon, Google, etc. like Amazon, Google, etc.

But at the same time, there are all these AOLs, Yahoos, and other companies that didn't survive. So there is a twofold point here. On the one hand, there is volatility; In a sense, it can be waited out by having a longer time horizon. But there's also the added risk of a point of failure in point of failure in any of these elements any of these elements , where, say, if a catastrophic event were to occur —and I think this is very difficult to talk about with Bitcoin, simply because it's inherently antifragile —but if we were to hypothetically assume that a catastrophe occurred and, say, Ethereum or Cardano crashed overnight, that could be an irreversible loss that you would n't get any benefit from. So I think this is where what I was talking about earlier comes into play: there's a difference between what's a difference between what's more of a commodity and what's more of an commodity and what's more of an investment in a company or a product.

A product that I think, especially from a family office and long-term investor perspective, requires you to have a clear understanding of: am I investing in a product or a company with its own risks? Yes, that's true, and I often talk to investors and sometimes I think about what would have to happen for you to say, "Okay, well, I 'll invest in this now." Is this market capitalization? Is this a long-term success story? I was having dinner the other day, and this guy was talking about a brilliant idea that was basically about manipulation—no, not manipulation, but using leverage.

And he then invested someone else's money in it. He then, you know, paid people money, and it was like a real estate business. But I said, "Well, what's the... We said, "Well, what's the... We ...

We've already moved on. What kind of success story does something have to have?" And that's a good question for you, considering that you you, considering that you , you know, make investments in these kinds of things. What kind of success story does something have to have for you to say, "Okay, fine, I believe in this now ." The history of indicators, and especially correlation, let's go back to all the questions you just asked.

Long-term investor or family office, absolutely agree. The backlash I get is actually the opposite. Family offices say, "We are long-term investors." One family member said, "I'm not investing for myself. I'm investing for my second generation."

I want him to adopt me, by the way. But if you look at if you look at how they think, they think about what could go wrong, because they are entrepreneurs and they know it. They don't avoid risk. Don't get me wrong. They love risk.

Their whole life is a risk, but this is one of the few times they say: I'm a long-term investor, but I don't see enough clarity in the long-term stability and ecosystems around me. So it's tactical, not strategic. I just wanted to come back to that because it was part of the conversation, and the usual answer is, " usual answer is, " yes, but it's long term, and in the long run, we're all going to die, not you." It didn't work. Sorry.

And then again...Well, I don't want to monopolize the conversation. Let's maybe give the floor to Sasha. I completely agree with this part, and maybe we need to distinguish between speculation and investing. These are two different things, and obviously they have different baskets, and if you have an allocation of 100 million and you take five for speculation, then of course they want to know which option is the best, maybe a hyperliquid one like Solana or something.

Then maybe other tokens come along, but when we talk about investing, they need, as Filippo just mentioned, to be sure, and they want to know what risk they are taking. They want to understand the risk, and if they're willing to take that risk, they understand it, then they're willing to take it, and that's what we're seeing with Bitcoin, especially these days. Yes. One of the incredible investment trends that I think will trends that I think will continue for the next 25 years is the artificial intelligence movement. And so, I think in the last Bitcoin cycle, we saw a huge amount of liquidity being pulled out of digital assets because, you know, they wanted to invest in SpaceX, they wanted to invest in Anthropic.

What does this situation look like when a family wants to distribute capital? Do they say, " Do they say, " Okay, we'll wait because we think this AI movement is more profitable than digital assets," or, you know, do they say, "We've already invested 5% in digital assets, so we'll do it anyway"? What does it look like? Yes, I think with the AI ​​movement it's interesting in the sense that it's probably closer to Bitcoin, in terms of investment profile, than it is to other types of digital assets. And the reason is that there is a hardware element and a software element .

And I think both are equally important, as we see with development, especially in Europe: you really can't build anything in Frankfurt, London, Amsterdam, Paris or Dublin until around 2030 unless you have a grid connection agreement. So from that perspective, it's completely AI perspective, it's completely AI beta, but with infrastructure cash flows associated with it. On the other hand, there's software that's much closer to what we have with digital assets, where maybe I don't know how many people are following this, but last night Jev came out , the first Safe States model, the System One model, which is a real- time model that kind of changes a number of paradigms of large language models for certain automation cases. So, from an investment perspective, we're probably discounting some of the future revenue that OpenAI is likely to receive, and now it's going to another company. So I think that when it comes to AI, you need to think about both sides of the equation.

But obviously, given the infrastructure side, it provides the opportunity that I mentioned earlier, to hedge that against the asymmetric growth potential of the individual business. After all, even if you have a data center, it doesn't matter whether Anthropic or OpenAI uses it; you still have a data center and you still have electricity. Anything else, Matt? Yes, I mean, when we talk about AI, crypto, etc., we were probably talking about an older generation that saw a lot of " that saw a lot of " bubbles."

So there are some comparisons to bubbles, you wouldn't be an investor in Napster, Yahoo or anything like that, and they were at the forefront of another " forefront of another " bubble." So what they're going through right now is a comparison to that case, and you just want to make sure you're not in the same basket. So that's what we're seeing as well. Can you add something about the " about the " bubble" moment for me? Because I think the interesting thing about bubbles, especially certain ones like especially certain ones like dot-coms, is that when the bubble is based on companies, there's a lot more risk, because you're just betting that the business will be able to grow and that consumer demand will match what you're actually offering.

But if you look at other bubbles, whether it's the railroad bubble in the 19th century or the telecommunications bubbles in the early 2000s, many of those bubbles created a lot of infrastructure that lasted for the long term and allowed other businesses to grow . And this infra- . And this infra- Is this my timer? Um, no- Is this my timer? Um, no- no.

Um, no, but you can actually own that infrastructure regardless of the circumstances. So I think there 's a certain amount of difference and nuance in how we should evaluate the AI ​​bubble, which might not be the same if we were trying to evaluate it the same way as, say, the crypto bubble or even the dot-com bubble. This brings me to what I keep hearing about intrinsic value. And so, I like this point, and I think that intrinsic value intrinsic value is, you know, what do you consider intrinsic value? And, honestly , I think it's subjective.

I was talking to someone last night and they were talking about the intrinsic value of social media. And I like the best example, so I was at the Barcelona match last night, right? And there, you know, thousands of people in the rain. Barcelona, terrible management, a lot of debt, but, you know, they can cost a fortune. But, therefore, do they have intrinsic value?

Because everyone can say: "Well, actually, now we support Real Madrid." So what happens then? So if you look at sports teams, musicians, all these people who are essentially paid by the network, do they have intrinsic value according to Benjamin Graham's book "The Intelligent Investor"? And I compare it to digital assets. So if you have 300 million people saying, "Well, actually, we believe in Bitcoin," is that the intrinsic value of the internet age?

I say yes. I mean, I think Doge—it's probably the best example of that, you could argue. Well, really? Yes, actually, that's right. I mean, that's the point.

This is nothing. It's a meme, but so "meme" that they even released a Doge-themed Axe deodorant, right? It's something that has such market appeal and associations that it's no different than when you're a football fan and you say: I support support Tottenham or Tottenham or Arsenal. Ultimately, it's really one of those things where it all comes down to whether you're able to command attention in the " attention economy," whether eyes are glued to screens and seats are filled, that has intrinsic value. To some extent, having the token in a wallet is similar to the kind of value where people hold Doge just for fun, but it creates an underlying value that matters to other investors.

Like a thesis that feeds itself . As, perhaps, the least young investor, uh... You remind me. Uh, what's your opinion on this? So, intrinsic value depends on what parameters you apply to it .

Is this a standard financial analysis? Of course, there is a lot to discuss, but first, let's stop talking about AI. Some missed it because of the intrinsic value of multipliers—it's too much, too expensive. We understand this, and they missed an opportunity. And for me, modestly and very simply, intrinsic value intrinsic value is how much you're willing to pay for it .

For me, this is value. Internal, external, your money, my money, you decide. But in the end, that's part of the deal. You can have them, of course, created in Excel or better—with the help of AI. Uh, assumptions about underwriting that confirm everything, and making scenarios.

This is part of due diligence. This is part of what you should have. But investing your money in buying something is a modest idea. Yes, thank you. Uh, we only have a few minutes left, so I'd like to go back .

The topic is, are family offices moving from surveillance to capital deployment? Uh, let's just take it one at a time. Is this happening? And if not, what needs to happen for that to start happening? Yeah, I think, for my part, and I've been in the cryptosphere for probably almost 4-5 years now after working in the banking sector banking sector , the discussions have changed quite significantly compared to when I came into this space, where, you know, you could meet maybe one person from a family office who was there just because they bought Bitcoin sometime in 2020, compared to where we are today.

I think the discussions are becoming not only much more interesting, but also much more professional. And I believe that education and understanding of the broader ecosystem is a fundamental component that is needed to move from observation to investment, given that the nature of family offices is different from, say, conventional venture capital or other types of investors. Sasha? Yes, I completely agree. When we launched our offer to the bank, maybe some of them had an interest in buying Bitcoin, etc.

We are having completely different conversations now. We have already been asked to offer products with profitability for BTC and other tokens. So I completely agree that the level of knowledge has increased significantly, and people now understand where they are investing and what they want. But maybe from a different perspective, I think we talk about crypto and traditional finance all the time, but ultimately they are merging into one market, and right now it's very volatile, shaky, and a lot of people are just scared. One can think of the Warren Buffetts of this world.

They keep cash aside, maybe invest it. So what to do now? For me, this is a common theme. Should I invest now? Keep cash aside and so on.

These are more targeted issues that we see. And where to distribute your assets and wealth and so on, because of all the government decisions, I think it's very difficult to answer that in one sentence. Yes. The last word is for Philip. The good news is that we have many potential buyers potential buyers .

But from what I see, the investment volumes are very, very, very, very small. The other good news is news is that when someone is interested enough to ask, probably you and me, they will ask a lot of questions about different areas. What should I do with my money? How can I invest in Bitcoin? Why other currencies?

Why? But I need risk and so on . And you are evidence of growing interest growing interest , which ultimately leads them to buy. Because our answer will be, my answer will be: I do n't know anything about technical stuff. But you know, that day in Barcelona you had two days with a certain number of days.

I've heard that people are already working on this aspect, so they know the problem exists. They write. They are thinking about it. They are looking for a solution. They know they do n't have a solution.

Because the worst thing for them is that they know about potential problems, but no one is taking it into account yet. So the good news is that we are moving in this direction, and I am confident that the user base will only grow. Yes, I agree with that. One thing we've focused on, so I'm going to promote my new company. So, the way to transfer Bitcoins or Bitcoins or any assets to your family should be tax-efficient tax-efficient , right?

And I think there are many ways to do traditional estate planning, you can do planning, invest in gold or, say, offshore bonds, etc. But there was no Bitcoin version, and I think for me, like at my previous company, we launched a Bitcoin ETF, and I think once the Americans launched their Bitcoin ETFs, it all became clear to me. Bitcoin is not going anywhere . So we thought, "Well, what do we do after this?" And that led us to create a bitcoin estate planning business , because bitcoin, I believe, is one of the biggest markets with the strongest growth.

More and more people will use it use it . He will grow. And people generally love their children, and they love Bitcoin more than inheritance tax. So, there has to be a solution for this. And I think, generally speaking, if you're a family that wants to pass on wealth, tax structuring is a very important thing.

So that's the reason why we started this new company. I have a solution. Come to Monaco. There are no taxes there. Yes, please.

Go to Monaco. It's too hot. Go live with Filippo. Go live with Filippo. Um, the timer, I don't know, the timer seems to have given us another 2 minutes.

So, does anyone have any questions? Because now we have an extra 2 minutes. Yes. What are your thoughts on investing in structured products versus liquid tokens? This is a difficult question.

Regarding the structured product, first of all, I never liked this meaning. It depends on who it comes from. If a bank offers a structured product, I don't even look at it. If it's a structured product like his, uh product like his, uh , just a "wrapper" because you have an idea that you want to implement, then I completely agree with that. But thanks again for the question.

It all depends on what exactly you are trying to achieve. If it's a structure related to your geography, your family, your heredity—if it's for the sake of the product itself, you can usually find better solutions than a " solutions than a " wrapper." If this is needed to resolve a specific issue regarding, again, your generation, wealth, geography, some crisis events, or inheritance transfer, then in that case I am very open to discussion. Is there anything else about this ? I probably compared it to gold.

Um, this also depends mostly on the generation. In my opinion, it is always better to invest directly in a liquid token, owning the token itself—it is like holding gold in a vault, not in a product, because the guarantee is right in front of you. But this is a question of generations. Young people are more likely to invest in products, and they don't care anymore. But yes, I would answer that question exactly like this.

Yes, and I think to consider the downside, you always have to consider what will happen in a given situation, right? Ultimately, liquid tokens have that extra liquidity that structured products may or may not have. So that's one aspect, especially given your risk profile, tolerance level, and market view: Do you need that liquidity immediately? This may incline you more towards a liquid asset than a structured product, or vice versa product, or vice versa . Thank you.

I'll ask you a question. Yes, thank you. We have 53 seconds if anyone has another question. No more questions. Okay, any final thoughts?

You have 45 seconds. Class, we'll give you these 45 seconds. You can spend another 45 seconds talking. Thank you to everyone who came. I hope you enjoyed your time in Barcelona.

I ca n't see anything. I give you the floor. Applause. Please give them a round of applause . Applause for them .

Applause for them . Applause for them. Thank you very much. Thank you.