New Fire Research Institute: The Arrogance of Traditional Trusts is Losing the Next Generation of High-Net-Worth Crypto Clients

Traditional trusts refuse to accept crypto-rich clients, and the gap in digital asset wealth architecture is giving rise to a new generation of trust services.

Summary

Traditional trust companies are rejecting a group of new clients who most need specialized wealth architecture services. The Financial Times recently reported that some traditional trust institutions refuse to establish offshore trusts for crypto-rich clients, citing high asset volatility, difficulty in auditing on-chain transactions, and challenges in digital asset custody. They even require clients to liquidate all digital assets before entering the trust structure in fiat currency.

This phenomenon exposes the disconnect between traditional trust services and digital asset wealth. With the gradual maturity of spot ETFs, on-chain analytical tools, and institutional-grade custody infrastructure, the issue is no longer whether crypto assets are suitable for trusts, but whether trustees can complete due diligence, custody, isolation, and inheritance of digital assets without lowering compliance standards. This article will analyze the real needs and professional value of digital asset family trusts around this transition.

• Pain Points: Traditional trusts still reject crypto wealth on the grounds of "high volatility, opacity, and custody difficulties," even requiring clients to "liquidate everything before entering the trust," ignoring their real needs for tax planning and asset isolation.
• Refutation: The popularity of spot ETFs, the maturity of institutional-grade cold-hot isolation custody, and the improvement of on-chain penetration auditing (KYC+KYT) tools have rendered the excuses of traditional institutions invalid.
• Differentiation: Crypto clients do not seek to lower compliance thresholds but need wealth managers who understand on-chain logic; trustees who refuse to update are handing the next generation of trillion-dollar family wealth to licensed digital asset trust institutions with full-stack capabilities.

I. The Reasons for Rejection are Being Refuted by the Market

Traditional trusts' discomfort with crypto assets usually revolves around three issues: volatility, opacity, and difficulty in custody. These three points may have formed a complete narrative in 2017 or 2022, but today they are hard to justify.

Source: https://www.hsbc.com.sg/content/dam/hsbc/en/docs/wealth-insights/learn-to-invest/meet-life-goals/hsbc-global-affluent-investor-snapshot-2026.pdf

First, let's look at allocation. After the launch of Bitcoin spot ETFs, digital assets are no longer just a "risk preference of crypto enthusiasts" but have begun to enter the discussion lists of pension funds, registered investment advisors, family offices, and even some sovereign allocations. Many traditional financial institutions, including HSBC, Charles Schwab, and Fidelity, generally recommend allocating 1% to 2% of the base in diversified portfolios, treating it as a non-correlated asset to hedge risks. With the digital asset treasury strategies of listed companies, crypto assets have long since departed from retail speculation and have become a portfolio asset constrained by corporate governance and auditing frameworks.

Next, let's examine transparency. Accusing on-chain assets of being "opaque" reflects a misunderstanding of the characteristics of distributed ledgers. Public and immutable on-chain transaction records have far greater penetration than most traditional offshore accounts. Where assets originate from compliant exchanges, whether they pass through mixers or involve sanctioned addresses, and whether there are risk gaps in cross-chain paths can all be quantified by on-chain analytical tools, which can cross-verify with client background due diligence (KYC), tax declarations, and proof of wallet control. The industry shortcoming is not "unable to conduct due diligence," but rather that traditional trustees lack the dual review capability to establish "asset anti-money laundering (KYT) + on-chain penetration."

Source: https://app.rwa.xyz/

Finally, let's consider infrastructure. The tokenization of real-world assets (RWA) is driving the on-chain settlement of government bonds, money market funds, and even private equity funds. According to RWA.xyz data, the current scale of tokenized real-world assets has reached $39 billion, particularly with tokenized securities rapidly developing under the promotion of multiple institutions. Multi-signature, cold-hot layered isolation, compliant custody, and digital inheritance technologies have evolved from concepts into mature tools. Equating the operational risks of losing private keys or the collapse of individual exchanges with "the asset class itself having original sin" is merely shifting the blame for the trustee's outdated infrastructure onto the assets themselves.

II. The Disconnect is Not in Asset Form, but in the Outdated Risk Control Standards of Trustees

The core contradiction in the trust industry today is not the lack of high-net-worth clientele, but the rigid risk control metrics of trustees failing to keep pace with the migration of client wealth forms.

Traditional trustees tend to equate "volatility with uncontrollability, on-chain with un-auditable, and private keys with un-custodial," thus opting for the easiest response: complete rejection. While rejection may mask short-term compliance anxieties, the intergenerational transfer of emerging wealth will not pause; it will only hand the trillion-dollar tokenized market to institutions that first complete compliance due diligence and custody capabilities.

Two representative intergenerational demands are particularly prominent:

1. The successor generation of traditional families: They are beginning to actively demand to mitigate fiat currency depreciation risks within trust portfolios by allocating some positions to digital assets.
2. The first generation of crypto-native entrepreneurs: Their asset scale is rapidly expanding, necessitating the establishment of legal barriers to defend against marital disputes, joint debts, and cross-border tax risks, while retaining strategic control over the underlying assets.

In the face of these demands, traditional trusts often provide crude and disconnected solutions—"liquidate everything first, then enter the trust with fiat." This approach flattens the core asset yield structure and long-term allocation intentions of the principal, while directly transferring tax burdens that could have been deferred within the trust structure back to personal accounts, akin to cutting corners.

III. Crypto Clients Want Not Just Flexibility, but Systematic Adaptation

For ultra-high-net-worth crypto clients, trusts need to solve more than just "help me hold the coins." They face a set of intertwined real issues: personal custody equals carrying around untraceable cash; they wish to retain trading and investment flexibility while needing to prove the legitimacy of fund sources and meet frameworks like CARF and CRS 2.0; assets under personal names cannot withstand divorce settlements, debt recoveries, and legal freezes; traditional wills are nearly ineffective in the face of private keys, on-chain accounts, and cross-border tax issues, with estate certification being costly, prone to disputes, and potentially leading to heirs being completely unaware of the existence of assets.

Source: https://www.oecd.org/en/events/2026/06/compiling-crypto-assets-in-macroeconomic-statistics-data-requirements-and-ensuring-consistency.html

A truly usable digital asset family trust must answer at least four questions. First, how to transition assets from self-custody to institutional-grade custody, replacing personal private key risks with multi-signature, cold-hot isolation, and licensed custody accounts; second, how to balance control and compliance? For example, by retaining a rights trust, allowing the principal to maintain investment directive rights or account operation rights during their lifetime while completing the legal ownership transfer to the trust; third, how to isolate assets as independent trust property, forming a legal firewall against marriage, debt, and litigation; fourth, how to bypass ambiguous inheritance procedures, relying on trust contracts and letters of intent to achieve private, phased, event-triggered intergenerational distribution.

This means that trustees cannot merely act as "document signers." They must integrate lawyers, tax advisors, custody, trading channels, and investment management into a single collaborative framework, making on-chain traceability a standard part of due diligence rather than an afterthought.

IV. Licensed Digital Asset Trusts are No Longer a Fantasy

The market is beginning to show stratification. The exit of mainstream traditional trustees does not mean that demand has disappeared; it merely pushes the business to those institutions that have built up their infrastructure first. Take New Fire Group (HKEX1611) as an example, which places digital asset family trusts at the end of the "trading—custody—investment—inheritance" closed loop, with a clear core proposition: to transform the digital assets of ultra-high-net-worth clients in the crypto space from personal private property into family wealth that can be transferred across generations in compliance with the principal's wishes and with low friction.

In terms of structure, such solutions typically do not pursue "one structure fits all." For principals with clear allocation intentions who wish to retain a high degree of trading autonomy, a retained rights trust (such as a dual-layer BVI structure) can be adopted, allowing the principal to control the lower-tier company or investment decisions, with children benefiting in phases based on age, education, or specific events; for clients who trade infrequently but still wish to issue buy and sell instructions, the principal can act as the investment manager, with the trustee reviewing and executing; for families that have not yet decided on final allocations and prioritize asset security and professional allocation, they may opt for discretionary trusts, with licensed asset management serving as the investment manager and guiding the trustee's discretion through letters of intent.

The establishment of such solutions heavily relies on the support of underlying licenses. This is by no means a marketing concept but a serious business strictly constrained by trust licenses, asset management licenses, and cross-border compliance declarations. To determine whether a trustee institution has the delivery capability, one should focus on whether it has established institutional-grade cold-hot custody solutions, whether its audit reports support the accounting of on-chain assets, and whether it possesses the capability to use "on-chain behavioral mapping analysis" as a standard anti-money laundering tool. New Fire Trust, a subsidiary of New Fire Group (HKEX1611), is a professional institution holding a Hong Kong TCSP (Trust or Company Service Provider) license, focusing on compliant virtual asset custody and trust services.

V. The Cost of Arrogance Will Manifest in the Next Generation of Asset Management Scale

The arrogance of traditional trusts does not manifest as disrespectful words to clients but as a more insidious attitude: defining whether a new asset "is suitable for inheritance" based on their own un-upgraded capability boundaries. When Wall Street has already incorporated Bitcoin into model portfolios, when on-chain ledgers are more auditable than some offshore accounts, and when tokenization is migrating government bonds and funds to the same settlement track, trustees still maintain a professional stance of "we do not touch crypto," which is no longer prudent but a rejection of important future clients.

The next generation of high-net-worth crypto clients does not seek to lower compliance standards but rather a compliance framework that understands the on-chain world. They can accept strict source reviews and even welcome more penetrating due diligence than traditional offshore accounts; what they cannot accept is being directly judged as "this type of wealth does not deserve to enter the trust" in the absence of review capabilities.

Wealth migration will not wait for cognitive catch-up. Whoever first integrates compliance due diligence, institutional custody, investment management, and legal rights confirmation into the same set of management capabilities will be able to capture this batch of high-net-worth clients rejected by traditional institutions; while those clinging to outdated standards will ultimately lose the foundational client base in the tide of asset migration in the new digital era.