In a notable shift towards the digital frontier, VMS Group, a seasoned Hong Kong family office managing nearly $4 billion in assets, is taking its first steps into the cryptocurrency realm. As reported by Bloomberg on Monday, the firm has allocated up to $10 million to investment strategies operated by the decentralized finance (DeFi) hedge fund Re7 Capital. This pivot underscores a strategic move to diversify VMS’s investment portfolio, traditionally anchored in private equity.
Venturing into the Unknown
The decision to delve into crypto marks a significant departure from VMS’s long-standing focus on private equity—a sector that has seen declining liquidity as companies opt to remain private for extended periods. According to Elton Cheung, a partner at VMS, this venture is driven by a desire for more liquid investment opportunities. Cheung highlights that the maturation of the regulatory landscape around digital assets and growing institutional interest have made this bold leap more attractive.
“With private equity’s liquidity drying up, digital assets present a compelling alternative,” Cheung shared with Bloomberg, pointing to a clearer regulatory framework in various jurisdictions. This regulatory clarity, coupled with the burgeoning demand from institutions, seems to have piqued VMS’s interest in the fast-evolving crypto market. As explored in our recent coverage of public companies pivoting to crypto, this trend is becoming increasingly common among traditional financial entities.
A New Era for Institutional Investment
VMS’s entry into the crypto space isn’t merely a reflection of internal strategy but also a microcosm of a broader trend among institutional investors. The crypto market, with its inherent volatility and potential for high returns, presents both a challenge and an opportunity for traditional financial firms. As more family offices and institutional investors like VMS explore digital currencies, the ripple effect on market dynamics could be substantial. This follows a pattern of institutional adoption, which we detailed in our analysis of crypto fund inflows, highlighting the resilience of digital assets even amidst market fluctuations.
Re7 Capital, the hedge fund receiving VMS’s investment, specializes in DeFi—a sector that’s often heralded as the future of finance due to its potential to disrupt traditional banking and financial services. This partnership could signify a deeper engagement with blockchain technologies, particularly those that promise to revolutionize financial transactions and lending.
The Road Ahead
While VMS’s foray into crypto is undoubtedly exciting, it raises pertinent questions about the long-term viability and risks associated with digital assets. The unpredictability of crypto markets—exemplified by recent price swings and regulatory crackdowns—continues to loom large, prompting a cautious approach from some quarters. Yet, for firms like VMS, the allure of diversification and the quest for higher liquidity appear to outweigh the risks, at least for now.
As Hong Kong gears up to allow crypto derivatives trading, the city’s financial landscape is poised for transformation. This regulatory shift could further embolden other family offices and institutional investors to dip their toes into the crypto waters, potentially sparking a new wave of adoption.
In the grand scheme, VMS’s move may well be a harbinger of a more profound shift in investment strategies among traditional financial institutions. As the lines between traditional finance and cryptocurrencies continue to blur, the investment landscape seems set for a seismic change. The question remains: will this be the beginning of a sustained trend, or is it a speculative venture into uncharted territory? Only time will tell.
Source
This article is based on: Hong Kong Family Office VMS to Allocate Up to $10M to First Crypto Play: Bloomberg
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
