Cryptocurrencies and Fashion Houses: Exploring Diversification and the Legal Risks of Non-traditional Assets

In this article, Lauren Rice, a 2025 Pre-University Rondil Scholar, writes on the juxtaposition of investment in non-traditional assets such as cryptocurrencies and fashion motifs. She draws on a previous paper she published under the guidance of her advisor, Dr. Ronald Omuthe, which focused on the risks of cryptoassets and how international law may be strengthened to reduce cross-border insolvency cases.

Author: Lauren Rice, Pre-University Scholar

Lauren is a brilliant young scholar from Singapore, on a path to pursuing international law at a top global university.

Introduction

There could be nothing more different than the quixotic designs of John Galliano and the technocratic undertones of the cryptocurrency market. Haute couture is fashion’s embodiment of artistry, whereas cryptocurrency is thought to represent the acquisitive and pragmatic nature of our capitalist economies.

It was precisely this juxtaposition that inspired me to write this blog. For all their differences, cryptocurrencies and luxury goods share the similarity of being non-traditional asset classes. Where the 2025 top 14 companies in the world were largely technology and oil businesses, LVMH (Moët Hennessy Louis Vuitton) stood at 15th for its massive presence within the luxury industry.^[1] And in the aftermath of the 2008 subprime mortgage crisis, the advent of Bitcoin saw overwhelming support from disillusioned citizens.^[2] Traditional assets like real estate and fixed income still play a large role in our economic ecosystem today, but investors are increasingly looking to diversify their assets. While stocks are considered a traditional asset, I have chosen to view the purchase of stocks from luxury brands as “non-traditional” given the dominance of technology firms and the financial services industry in today’s stock market.

In writing this blog, I hope to give my own opinion on these two asset classes. Given my interest in law, I have decided to focus on one legal aspect of each asset: the risks of cryptoassets that contribute to insolvency, and mergers and acquisitions (M&A) that have taken place within the luxury industry. Insolvency and M&A may be likened to different stages of life: insolvency refers to the “death” of a company (or, in technical terms, the failure of a company to repay its debts on time), while M&A involves the commercial “marriage” of companies to form one entity.

Cryptoassets: Go Big or Go Home

In January of 2025, Donald Trump’s newly launched crypto token surged from less than $10 on 18 Jan 2025 to as high as $74.59 on 19 Jan 2025.^[3] This is one example, among many, of the volatile nature of cryptocurrencies. An investor may reap unparalleled rewards in the cryptosphere as compared to the stock market, but he also takes on much greater risk.

Cryptocurrencies are controversial because they are speculative assets: they are not tethered to physical assets, nor are they reliant on company earnings. An investor buys $10,000 worth of cryptocurrency X only because he predicts that another investor will purchase it for a higher price. For this reason, cryptocurrencies are especially susceptible to the market forces of supply and demand. As a nascent market with hundreds of thousands of new users each day—approximately 100,000 in the beginning of 2018^[4]—cryptocurrency prices often fluctuate with the vested interests of new users. The scarcity of cryptocurrency supply may also influence consumer demand: it was the low supply cap of Bitcoin (21M BTC)^[5] that drove up its demand in recent years. Evidently, the speculative nature of cryptocurrencies creates larger fluctuations in supply and demand as compared to traditional assets, contributing to their volatility.

Another intrinsic problem of cryptocurrencies is their pseudonymity. On cryptocurrency websites, investors purchase cryptoassets under pseudonyms, not their actual names. This property of cryptocurrencies was once lauded as a way to evade the watchful eye of the federal government, after citizens grew disenchanted with the Federal Reserve’s ability to contain the subprime mortgage crisis. However, this also meant that criminal networks could thrive in the decentralised cryptosphere, where regulatory frameworks were not yet robust.

One such example is Tornado Cash, a privacy-enhancing intermediary in cryptocurrency transactions. In August of 2022, the US Office of Foreign Assets Control sanctioned the company after it was revealed to have been involved in the laundering of $7B worth of USD in cryptoassets.^[6] Evidently, the additional layer of privacy that users enjoy also makes it easier for criminals to evade detection, and can result in huge losses for cryptocurrency firms.

While money laundering threats rarely lead to insolvency, other underregulated threats can result in a company’s collapse. This is the third major risk of cryptocurrencies: as a fairly new asset class, cryptocurrencies often lack adequate regulation. As I argued in my paper, current regulatory frameworks governing stablecoins are still insufficiently robust, as they do not mandate the full backing of stablecoins.^[7] Stablecoins, or cryptocurrencies that are pegged 1:1 to a fiat currency, can be redeemed en masse for liquid cash if investors lose faith in the asset. However, if a company has 100 units of stablecoins on the market, and only 50 units of cash in its reserves, it will be unable to fulfill the redemption requests of investors. As was instantiated in the June 2021 collapse of the IRON stablecoin, such regulatory insufficiencies can lead to the insolvency of cryptocurrency firms.^[8] Until legal gaps are shored up, cryptocurrencies will remain susceptible to exploitation.

While new legislation for cryptocurrencies has been implemented in recent years, regulatory insufficiencies still persist. These insufficiencies, coupled with the intrinsic volatility of cryptocurrencies, make cryptocurrencies a tenuous investment. While crypto may present an attractive alternative to traditional assets, it is unlikely to replace them completely in the coming years. From my perspective, the average person might use the cryptosphere to rapidly accumulate wealth, but it would be prudent to focus on more stable traditional assets.

LVMH and its Chokehold on the Luxury Industry

Under the helm of luxury tycoon Bernard Arnault—better known for his nickname “the wolf in cashmere”—LVMH’s revenue grew from $1.9B in 1987 to $58.1B in the first nine months of 2025.^[9] Between these years, it was not just Bernard’s wealth that grew, but also the consumer base of luxury fashion houses.

Back in the 1910s and 1920s, fashion houses like that of Coco Chanel and Elsa Schiaparelli catered to a distinct group of upper-class bourgeoisie. Prior to Arnault, no one had thought to commercialise luxury fashion since its value lay in its exclusivity. Arnault, however, recognised the potential of the luxury industry to evolve into a globalised conglomerate model. By creating a portfolio of 75+ “Maisons”, he pioneered a system where luxury houses could share distribution networks yet retain their signature looks.^[10]

While this section of my blog focuses primarily on LVMH’s luxury fashion sector, it is worth mentioning that LVMH consists of six main sectors, including wines and spirits. The initial merger of fashion house Louis Vuitton and champagne producer Moët Hennessy was an attempt at creating a luxury conglomerate across various luxury sectors. This allowed a diversification of the businesses’ assets, and made it easier to gain a monopoly over the luxury market.

Today, Arnault’s “mega-brand” LVMH has largely achieved this goal, and is challenged only by the smaller and more fashion-focused conglomerate, Kering. Even though Kering is LVMH’s biggest competitor, it hardly rivals LVMH in size, and its yearly revenue totals up to tens of billions less than LVMH’s. To this end, LVMH’s acquisition of up-and-coming fashion houses has proven successful.

It is therefore worth noting the benefits of M&A within the luxury industry, and how one might invest differently in individual fashion houses depending on whether they are a subsidiary of a larger conglomerate. As I previously mentioned, being a part of LVMH allows fashion houses to share distribution networks and internationalise under a reputable conglomerate.^[11] Many fashion houses began as family-owned businesses in Europe, which made it difficult to scale their operations worldwide. Under LVMH, they could more easily dominate the market through economies of scale and superior supply chain control. Rather than focusing on short-term survival, smaller houses would be able to capitalise on LVMH’s immense capital, allowing them to prioritise long-term creative growth. Overall, LVMH provided a larger pool of resources while allowing these houses to retain their brand identities—a win-win situation for both parties.

This also provided smaller houses with greater stability. The diverse portfolio of LVMH from its initial merger meant that during economic downturns, subsidiaries of LVMH would be buffered against massive losses that might otherwise cripple individual competitors. The 2008 Global Financial Crisis provided an apt illustration of this: LVMH’s top luxury brands like Louis Vuitton experienced more robust post-crisis recovery as compared to individual brands.^[12]

Moreover, the acquisition of smaller fashion houses gave Arnault the opportunity to revitalise brands that had fallen out of fashion, by appointing new creative directors that appealed to the “new money” generation of consumers. This selection of new confrères indulged the masses’ demand for spectacle, and further commercialised fashion as we know it today. In 1996, John Galliano was appointed as creative director of Dior, a brand that had lost much of its lustre since Yves Saint Laurent’s dismissal in 1960.^[13] With extravagant collections like his Spring-Summer 1998 couture collection, Galliano generated enough publicity to reinvigorate the Dior label. Other couturiers were appointed to maintain the appeal of ready-to-wear collections, a job that Alexander McQueen executed impeccably during his tenure at Givenchy. This cycle of ousting outdated designers and bringing in newer creatives allowed Arnault to keep his Maisons au courant, ensuring the sustainability of LVMH’s fashion houses.

So far, all this points to the conclusion that subsidiaries of LVMH inherently enjoy more stability than individual competitors. While this may be the case for many individual competitors, Hermès has proven to be an exception to the rule. The French luxury house initiated proceedings against LVMH in 2012 when LVMH attempted to fraudulently acquire shares in Hermès,^[14] stating that the brand wished to preserve its then 173-year family legacy.^[15] Since then, Hermès has thrived as an independent brand recognised for its exceptional stability.^[16] Despite not being a subsidiary of LVMH, Hermès’ business strategy of controlled scarcity has created a burgeoning demand for its luxury items. Its clientele further lends to its immunity during economic downturns, making it a fashion powerhouse in its own right.

A brand acquired by LVMH typically experiences a net gain from the mutualistic relationship. That is not to say, however, that independent brands are less stable or not worth investing in. By analysing a brand’s overall strategies as well as their consumer base, the layperson can better assess a brand’s stability and potential for growth.

On the whole, the acquisition of stocks from brands that are largely resistant to economic downturns provides a low-risk way of diversifying one’s portfolio. Assets within the luxury industry are veblen goods, meaning that demand for them increases with price. Controlled scarcity and years-long waiting lists attract a consumer base that is unlikely to be significantly affected by financial crises, unlike assets in other domains that currently dominate the stock market (e.g. technology). In my view, purchasing stocks from these luxury brands is therefore an attractive investment that generates consistent returns.

Conclusion

Luxury goods and cryptocurrencies may both be non-traditional asset classes, but their similarities end there. Luxury goods are incontestably the more stable asset, relying on their opulent consumer base and the creative visions of fashion houses to create long-term sustainability. By contrast, the volatility and underregulation of cryptoassets burden investors with a high risk profile—but also provide the enticing possibility of high returns.

With predictions of the next big financial crisis circulating in the media,^[17] it may be well worth our while to diversify our portfolios. The more ambitious of us may venture into the cryptosphere, while my risk-averse self will most certainly stick with Dior or Hermès.

Ultimately, my suggestions are but guidelines for the average investor. My blog includes insolvency and M&A as legal elements because these are my areas of interest, but there are of course other legal and economic considerations to take note of. To anyone treading into the cryptosphere, I wish you the best of luck; to those entering the dominion of LVMH, you may find that patience and longevity prove the more reliable investment.

References

^[1] LVMH: Acquired, Acquired podcast (2025).

^[2] Government Failure Caused the Financial Crisis (2009), https://iea.org.uk/blog/government-failure-caused-the-financial-crisis (last visited Jan. 26, 2026).

^[3] Elizabeth Howcroft, Rae Wee & Michelle Conlin, Trump’s New Crypto Token Jumps Ahead of His Inauguration, Reuters (2025).

^[4] Exponential Growth: Cryptocurrency Exchanges Are Adding 100,000 Users Per Day, Cointelegraph, https://cointelegraph.com/news/exponential-growth-cryptocurrency-exchanges-are-adding-100000-users-per-day 

 (last visited Jan. 28, 2026).

^[5] How Cryptocurrency Prices Work Explained, Investing.com, https://www.investing.com/news/cryptocurrency-news/how-cryptocurrency-prices-work-explained-1542087 

 (last visited Jan. 28, 2026).

^[6] Xiong Xihan & Luo Junliang, Global Trends in Cryptocurrency Regulation: An Overview, in Mathematical Research for Blockchain Economy 71, 75 (2024).

^[7] Rice Lauren, On Cryptocurrencies: Guidelines for a Global Legal Framework to Mitigate Insolvency Risks, Baku St. U. L. Rev. (Oct. 2025).

^[8] Austin Adams & Markus Ibert, Runs on Algorithmic Stablecoins: Evidence from Iron, Titan, and Steel (2022), https://www.federalreserve.gov/econres/notes/feds-notes/runs-onalgorithmic-stablecoins-evidence-from-iron-titan-and-steel-20220602.html (last visited Jan. 27, 2026).

^[9] Improvement in Trends in Q3 of 2025, LVMH, https://www.lvmh.com/en/publications/amelioration-des-tendances-au-troisieme-trimestre- (last visited Jan. 28, 2026).

^[10] Our Maisons, LVMH, https://www.lvmh.com/en/our-maisons (last visited Jan. 28, 2026).

^[11] Rouxuan Chen, Analysis on How LVMH Can Be the Leader of the Luxury Industry, Advances in Economics, Business and Management Research, vol. 190 (Atlantis Press 2021) DOI:10.2991/aebmr.k.210917.013.

^[12] Is the Luxury Recession Finally Here?, Vogue, https://www.vogue.com/article/luxury-recession-saks-bond-yield 

 (last visited Jan. 28, 2026).

^[13] Liberty, Equality and Great Suits, The Guardian (Observer) (Jan. 13, 2002), https://www.theguardian.com/theobserver/2002/jan/13/featuresreview.review1.

^[14] Hermès vs. LVMH: A Timeline of the Drama, The Fashion Law, https://www.thefashionlaw.com/hermes-vs-lvmh-a-timeline-of-the-drama/ (last visited Jan. 28, 2026).

^[15] How Hermès Got Away from LVMH—and Thrived, The Economist (Sept. 12, 2020), https://www.economist.com/business/2020/09/12/how-hermes-got-away-from-lvmh-and-thrived.

^[16] Hermès Bags in Economic Downturns: How Resilient Are They as Investments?, Rome Station, https://romestation.ca/blogs/news/hermes-bags-in-economic-downturns-how-resilient-are-they-as-investments 

 (last visited Jan. 28, 2026).

^[17] The Next Big Financial Crisis May Already Be Brewing, The Guardian (Sept. 25, 2025), https://www.theguardian.com/commentisfree/2025/sep/25/us-stock-market-trump-wall-street-financial-crisis-federal-reserve.