In 2025, strong performance often opened the door to institutional conversations, but it wasn’t always enough to get capital across the line.
As the year draws to a close, and preparations begin for due diligence engagements in 2026, several operational themes have consistently emerged across crypto due diligence processes, particularly where institutional allocations stalled, slowed, or failed to progress.
2026 Themes
- Lessons from the October 2025 volatility spike and liquidations: How managers oversee portfolio leverage and define liquidation parameters.
- Regulation hasn’t suddenly disappeared: Clarifying that recent policy enthusiasm hasn’t altered existing laws and regulatory obligations that remain in force.
- Questioning delays in reporting: Limitations of service providers in delivering timely and consistent performance and audit reporting, due to limits in their technology, processes, staffing or miscommunication by their clients during the finalization of service agreements and onboarding.
- Level-setting on why crypto operations are different: Why some taboos, such as self-custody, make sense for effectuating certain strategies and how a fund can demonstrate institutional controls.
- Coaching portfolio managers on transparency: Institutional capital often comes with institutional standards, where documentation of policies and processes are key to establishing that one can be a trusted fiduciary. Conversely, helping investors understand that presenting a “check the box” approach to a newly launched manager deprives the opportunity of giving good advice and receiving a better (and often appreciated) outcome for all.
In consideration of the process and examples provided above, we at Crypto Insights Group have the particular benefit of participating in many of the interactions between those seeking capital and those looking to deploy it. Although not all crypto investment strategies have been successful in providing positive, or outsized returns, as we conclude and record 2025 performance, it remains in our view that operational matters continue to present the most friction points and delays in capital allocation.
So as we look to a new year, here are some suggestions on what we, as a crypto investment industry, can do from an operational perspective to raise standards and turn up the interest in our respective (digital) asset class. Taken together, these observations point to a common theme: institutional capital increasingly differentiates managers not only by what they trade, but by how effectively their operations scale, communicate, and adapt to change.
Preparation Is Key
There have been many instances of both existing and emerging investment firms where they have assumed that their past successes in raising capital have come predominantly from past investment performance success. However, that came at a time (often within recent years), where the capital they raised was from close relationships such as prior clients, friends and occasionally, family members.
In many such instances, there happened to be an alignment of raising capital during a time that early crypto adopters could see the opportunity and potential of digital assets, and likely didn’t ask too many questions beyond, “Where do I send my money?”
However, as early successes ran their course, and funds were looking to raise more capital, they quickly began to realize those institutional “checks” were harder to come by.
Family offices, crypto fund of funds and multi-managers, came in and began raising the standards of operations by asking deeper questions, and seeking documentation of daily operational interactions, often taking weeks or months to make a final decision.
In 2025, and with the benefit of an early crypto bull market, more institutional investors started to take interest and approach managers on their offerings. Unfortunately, and in both my professional experience, and in speaking to other institutions (including current clients), there was a theme of dissatisfaction with the level of responsiveness to due diligence, of which such feedback included:
- A lack of fulsome documentation, beyond a one page factsheet or overly marketed manager-issued presentations.
- In inability to account for where total counterparty exposure exists, and whether those relationships are consistently assessed, or how a “liquid” fund is structured, including the presence of illiquid positions, side pockets, and related investor rights.
- A lack of consistency of cybersecurity processes and business resiliency, and knowing that “It’s on my to do list” is not going to make the grade for someone already concerned about the propensity of crypto cyber crimes.
What this revealed was a mismatch between where many firms were operationally and the expectations of the next phase of institutional growth, which includes longer and deeper due diligence cycles with a diversified set of investors.
Our advice, for both large and small managers alike… Take time to understand the expectations of the type of client you are working with. If you are receiving feedback in the form of repeated questions on the same subject, or are not providing fulsome responses to a due diligence questionnaire, many investors will likely move on, as it is their job to assess your investment strategy and business, not manage it.
As we head into the start of a new year, and the processes of due diligence for Q1 and Q2 2026 allocations have already commenced, take time to prepare thoughtful and direct responses to questions, while also understanding that providing documents with proper detail, and consistent attention to operational risks, often makes for a smoother process.
Communication Helps Manage Expectations
As many managers put in the time and effort to manage consistent investment returns, and satisfy client due diligence needs, we have also received feedback from allocators that after an allocation is made, changes to strategies, product offerings and related operations are often not communicated in a clear or timely manner, and therefore may change the risk profile initially underwritten.
Examples throughout 2025 include adding new asset-types to portfolios which were not part of the initial investment mandate, such as a pivot to listed securities, certain DeFi instruments or deployments of financial leverage. The operational knock-on effects of which include:
- Trading securities, which can change the regulatory, compliance and governance requirements of an investment firm.
- The need for additional execution, order and portfolio risk management processes, and systems.
- Establishing relationships with traditional counterparties, through prime brokerage or ISDA agreements, which require differentiated tracking and responding to contractual agreements from crypto counterparties.
- Introducing operational complexity to transaction (i.e., cash/fiat or crypto) management and reconciliation.
- Potential changes to the liquidity profile of a fund or separate account.
- Modification to, and additional responsibilities for, a manager and service providers in assuming complexity of valuation and pricing policies.
In aggregate, operational pivots like those described above have given some investors pause in allocating further capital, or redeeming some of their holdings, as the investment and operational profile has changed with meaningful significance from what they had initially subscribed to.
The learning here is as managers consider such changes heading into 2026, they should ensure they implement a communication strategy to their clients on the rationale for such decisions, and ensure related operational impacts are reflected in updated documentation (i.e., investor letters, amended offering documents, revised due diligence questionnaires, policy enhancements, etc.).
Looking Forward to 2026
In presenting the above, I hope that these reflections on the last year, and preparation for the next, provides useful guidance, and a roadmap for crypto managers and allocators alike to find themselves on a path to productive interactions throughout future due diligence processes.
As raising capital in an already competitive market increases in complexity for those firms seeking institutional adoption, preparation and communication are often the characteristics which stand out to investors the most.
Here at Crypto Insights Group, we strive to be a resource within the digital assets industry by providing clear analysis, research, benchmarking and due diligence, commensurate with facilitating the standards expected of other traditional asset classes, but with the benefit of working within the growing asset class of the crypto.
