Guardians of Wealth: Hong Kong’s VMS Group Makes Its Crypto Debut

Key Takeaways :

• VMS Group Enters Crypto: Hong Kong-based family office with ~$4 billion AUM allocates up to $10 million to Re7 Capital’s DeFi strategy
  
• Strategic Timing: Expansion driven by clearer regulations, institutional backing, and rising client demand
  
• Risk Mitigation via Indirect Exposure: Chooses a market-neutral DeFi hedge fund to temper volatility and target double-digit returns
• Wider Family Office Trend: 39% of single-family offices exploring crypto, average allocations ~1.8% of portfolios
  
• Diversification Imperative: Private credit, infrastructure, and alternative assets now represent >40% of family office portfolios
• Next Steps: VMS also evaluating crypto payments for Vietnam real estate projects; younger family members driving innovation
  

1. Background: VMS Group’s Traditional Roots and New Horizons

For two decades, VMS Group has been a stalwart of the private-equity world, stewarding the wealth of Hong Kong’s most prominent ultra-high-net-worth families. With assets under management (AUM) totaling approximately $4 billion (¥580 billion, at ¥145.27/$1) as of June 25, 2025, the multifamily office has built a diversified portfolio spanning real estate, conglomerates, and early-stage AI ventures. In 2023, VMS partnered with former SenseTime executives to establish an AI-focused seed fund, marking its first foray outside traditional domains.

Why Crypto Now?
Managing Partner Elton Chong cites three converging factors:

1. Regulatory Clarity: Local authorities in Hong Kong have laid out explicit guidelines for institutional crypto participation.
2. Institutional Validation: Large asset managers and family offices globally are signaling support for regulated digital-asset exposure.
3. Client Demand: Younger scions of billion-dollar families are increasingly eager to explore blockchain’s practical applications.

2. Structure of the Crypto Allocation

2.1 Indirect Investment via Re7 Capital

Rather than direct spot purchases of Bitcoin or Ethereum, VMS will allocate up to $10 million (¥1.45 billion) to Re7 Capital, a DeFi hedge fund established in 2021. This represents roughly 0.25% of VMS’s total AUM.

Re7 Capital’s Strategy:

• Market-Neutral Approach: Combines liquidity-provision on decentralized exchanges with stablecoin lending, seeking steady, uncorrelated returns.
• Volatility Control: By hedging directional exposure, the fund has delivered consistent double-digit annualized returns since inception.
• Quarterly Transparency: Re7 issues attestations ensuring no preferential treatment for insiders or opaque benefit-structures.

2.2 Comparison to Direct Allocations

Institutional surveys indicate that average family-office crypto allocations remain modest: roughly 1.8% of portfolios, with 39% of single-family offices either invested or evaluating crypto exposure. VMS’s indirect exposure aligns with a cautious yet pioneering stance.

3. Broader Industry Trends

3.1 Family Offices and Alternative Assets

BlackRock’s 2025 Global Family Office Survey finds that alternative assets now constitute 42% of surveyed family-office portfolios, versus 39% in 2022–23. The top areas of planned increases across 2025–26 include:

• Private Credit (32% of respondents)
• Infrastructure (30%)
• Digital Assets (Cryptocurrencies)

3.2 Generational Shifts in Investment Philosophy

Younger family-office members are driving interest in tech-enabled assets, including:

• Blockchain Payments: VMS is evaluating crypto settlement for a Vietnam real estate project, streamlining cross-border transfers.
• Tokenized Real-World Assets: Demand for fractionalized ownership in art, real estate, and alternative credit is surging.

3.3 Regulatory Evolution

Hong Kong and U.S. regulators are moving toward cohesive frameworks for institutional crypto:

• Hong Kong’s Virtual Asset Service Provider (VASP) Guidelines clarify custody, AML/KYC, and licensing rules.
• The U.S. Coin Act and related bipartisan bills aim to mandate disclosure and recusal requirements for public-office holders, enhancing transparency.

4. Risk and Compliance Considerations

While crypto offers diversification and potential returns, family offices must navigate:

• Market Volatility: Even market-neutral strategies can suffer correlation spikes during systemic events.
• Counterparty Risk: Smart-contract bugs and protocol exploits remain concerns in on-chain lending.
• Regulatory Shifts: Sudden policy reversals or tax changes can impact operational viability.

VMS’s choice of an established DeFi fund with transparent attestations mitigates these risks, balancing innovation and prudence.

5. Visualizing the Allocation

Below is a bar chart comparing VMS Group’s total assets under management with its inaugural crypto allocation:

6. Outlook and Next Steps

With this landmark move, VMS Group joins a growing cadre of family offices shifting a slice of their portfolios toward digital-asset strategies. Looking forward:

• Performance Monitoring: VMS will track Re7’s returns quarterly and assess potential move to direct investments if regulatory clarity and custody solutions mature.
• Expanded Use Cases: The Vietnam real estate payment pilot could pave the way for crypto settlements in other asset classes.
• Collaboration Opportunities: Strategic partnerships with custodians and compliance platforms will be key to scaling institutional crypto exposure.

7. Conclusion

Hong Kong’s VMS Group has taken a measured yet meaningful step into crypto, reflecting broader family-office trends toward diversification, technology adoption, and the influence of younger generations. By opting for an indirect, market-neutral DeFi strategy, VMS balances potential high returns with risk management, setting a template for peers looking to navigate the evolving intersection of traditional and digital finance.