Regulation opened the door. Allocators decided how far to walk through it.
2025 had real, meaningful regulatory headlines. Market structure, custody, enforcement, and product clarity all improved. That mattered, and it expanded who could participate in digital assets, giving institutions permission to spend real time on the space.
It wasn’t a year where allocators suddenly started writing large checks at scale. They tried to answer a more basic question, “Does this asset class fit inside our existing framework at all?”
For motivated allocators, they used regulatory clarity to formalize internal frameworks, define risk boundaries, and evaluate digital asset exposure through the same lens they apply to other active strategies. Time was spent diligencing, pressure-testing assumptions, and working through whether digital assets could fit inside existing portfolio structures.
That shift in behavior is now shaping how active management will be evaluated in 2026.
More engagement, more scrutiny
Allocator participation and focus on crypto increased throughout 2025. Family offices, high net worth investors, endowments, and traditional institutional platforms all spent more time engaging with the space.
Unfortunately, that engagement didn’t translate into widespread capital deployment among larger institutions and others. What increased meaningfully was allocator time and attention. More meetings, deeper diligence, and meaningful internal discussion became the norm. This was typically led by one or two internal champions.
For institutions, this is a familiar pattern. Diligence comes first, often well ahead of allocations. In many cases, the outcome of 2025 was a clearer understanding of what didn’t meet institutional standards, which is an important step in the adoption cycle.
Allocators stopped treating crypto as a single decision
Another shift which became clear in 2025 was how allocators framed crypto exposure.
Instead of approaching it as a single allocation, allocators increasingly segmented crypto the same way they do other asset classes.
Passive exposure, largely centered on Bitcoin, continued to serve as an entry point. Active illiquid strategies, including venture, remained an important part of the ecosystem, but came under greater scrutiny as allocators reassessed pacing, cash flows, and realized outcomes, particularly in light of lower distributions across recent vintages.
Active liquid management became the area of greatest focus. This is where institutional hedge fund standards were applied most directly, with closer attention to liquidity, risk management, transparency, and repeatability. Rather than stepping away from the asset class, allocators were refining how different crypto exposures fit within their broader portfolios.
What allocators prioritized once guardrails were in place
As internal allocator frameworks took shape, priorities shifted in practical and observable ways.
Structure and controls moved earlier in the evaluation process. Allocators spent less time on strategy labels and more time understanding how returns were generated, how risk showed up, and how strategies behaved during periods of stress.
Communication cadence became increasingly important. Allocators were generally comfortable with volatility when managers were consistent, transparent, and proactive, and far less patient when updates were slow, vague, or reactive. In early conversations, it also became clear that operational clarity mattered more than many managers expected. Allocators increasingly differentiated between teams that could clearly explain how their operations were structured and governed, and those that struggled to articulate even basic elements of their operating model.
As a result, operational considerations such as vehicle design, liquidity terms, counterparty exposure, and key operational dependencies surfaced earlier and more frequently in diligence discussions. These topics were no longer viewed as follow-up items, but as integral to understanding how a strategy would function in practice.
Performance still mattered, but it was evaluated alongside process, operational readiness, and observed behavior rather than in isolation.
Who was able to keep allocator attention
Allocator outcomes in 2025 increasingly reflected manager behavior over time. Managers who remained engaged tended to invest in institutional processes earlier than strictly necessary. They could explain their strategies clearly, without leaning on narratives or market positioning, and were generally well prepared for an in-depth diligence discussion.
Standardized reporting helped largely because it made conversations easier and more productive for both sides. Allocators gravitated toward managers who could present information in a clear, consistent way and quickly address follow-up questions without having to reframe the discussion each time.
During drawdowns, the managers who retained allocator confidence were typically those who explained what was happening in real time, acknowledged uncertainty, and stayed communicative. That consistency helped allocators maintain context, even when performance was under pressure.
As expectations rose, gaps became more visible. Inconsistent updates, unclear strategy explanations, and heavy reliance on historical performance were harder to reconcile in an environment where allocators were spending limited time across a small number of managers.
From what we saw, credibility during difficult periods ended up mattering more than strong short-term results.
Strategy-level shifts beneath the surface
Allocator behavior also evolved across strategy types.
Fundamental, thesis-driven directional strategies showed wide dispersion. The segment also experienced consolidation, with some managers winding down or merging, and others expanding into adjacent strategies or public equities. Allocators paid closer attention to organizational resilience and capital stability alongside the investment thesis.
Market neutral strategies remained in steady demand, particularly as allocators looked for returns less tied to market direction. As basis and carry opportunities compressed (or shifted frequently), allocators became more effective at distinguishing diversified approaches from single-engine strategies.
Quantitative strategies drew interest when managers demonstrated consistent, risk-adjusted outcomes and could explain model behavior across market regimes. The focus was on repeatability and drawdown management rather than headline returns. Like most years in crypto, bouts of severe volatility tested these risk engines.
Yield-oriented Bitcoin strategies gained attention among family offices, high net worth investors, and digital asset treasury companies. At the same time, diligence around structure, counterparty exposure, and regulatory design intensified.
Across strategies, allocator selectivity increased.
When access expanded faster than understanding
Broader participation also introduced complexity.
Digital asset treasury companies increasingly functioned as active management vehicles, particularly for family offices. While this expanded access, it also blurred distinctions between operating businesses, balance sheet strategies, and discretionary risk-taking.
Alongside this, crypto-specific multi-managers began building portfolios across funds and SMAs. This mirrored the evolution of traditional alternatives. A notable shift was that many of these efforts are now being led by institutions with experience building multi-manager platforms in traditional markets, and applying those frameworks to crypto.
Why early interactions carry more weight
Most allocators engage with only a small number of crypto managers before forming a broader view of the category.
Diligence demands are high, time is constrained, and internal resources are limited. For many allocators, the result of 2025 diligence was a decision to wait, refine criteria, or step back altogether; A process that serves the purpose of narrowing the field and clarifying expectations.
At the same time, it raises the stakes for managers. Institutional readiness, clarity, and responsiveness increasingly influence whether allocators deepen engagement with the asset class or disengage from it. Delays in producing basic diligence materials became more visible in an environment where allocator time was limited.
Structural changes that mattered quietly
Several structural shifts took place in 2025 without much noise, but had meaningful implications for how allocators evaluated managers.
Separately managed account (SMA) adoption continued to increase, largely driven by alignment, control, and flexibility. For many managers, SMAs became a practical way to onboard capital and build early relationships, often through a series of smaller allocations that allowed allocators to get comfortable with execution, reporting, and risk management.
As SMA programs scaled, operational complexity became more visible. Managing a growing number of bespoke accounts introduced challenges around trade allocation, reporting consistency, fee mechanics, liquidity management, and counterparty coordination. In response, many managers looked to simplify their operating models by consolidating SMA capital into open-ended, commingled funds.
That transition, however, proved uneven. While commingled vehicles offered operational efficiency for managers, many SMA investors were reluctant to roll into pooled structures, often due to governance preferences, customization requirements, or internal constraints. As a result, managers found themselves balancing the operational burden of maintaining multiple SMAs against the practical limits of consolidation.
Allocators took note. The ability to manage this transition, clearly explain the tradeoffs, and maintain operational clarity, increasingly factored into allocator confidence. In such an environment, execution infrastructure and operational decision-making became as important as investment results.
At the same time, risk discussions broadened beyond volatility. Allocators focused more on vehicle structure, counterparty exposure and liquidity dynamics. Diligence continued to evolve into an ongoing process, shaped by how managers operated over time rather than a one-time review.
What remained consistent
Certain fundamentals didn’t change…
Performance mattered. Conviction mattered. Relationships mattered. There wasn’t a universal institutional template and there isn’t a shortcut to credibility.
What changed was how clearly expectations were defined.
Considering the above, it makes sense to acknowledge the asymmetry this environment creates. Allocators increasingly expect institutional readiness early in the process, while many managers are still building the infrastructure needed to support future meaningful allocations. For emerging and growing teams, this is often a sequencing challenge rather than a lack of intent.
In practice, allocator confidence in 2025 was shaped less by perfection and more by trajectory: could managers clearly explain their operating model, demonstrate progress over time, and show an understanding of where their approach needed to mature? Readiness became less binary and more observable, with credibility built through consistency, responsiveness, and incremental institutionalization rather than fully formed infrastructure on day one.
As those expectations became clearer, benchmarking emerged as another point of friction. Many allocators naturally anchored their evaluation of crypto strategies to Bitcoin, which served as a familiar, liquid reference point and baseline for opportunity cost. From an allocator perspective, asking whether active management added value relative to Bitcoin was a rational starting question.
Managers, however, often didn’t view Bitcoin as an appropriate benchmark for how they generated returns. Many strategies were designed with objectives and risk profiles that intentionally diverged from Bitcoin’s behavior, and benchmarking them directly to Bitcoin could obscure objectives or misrepresent risk.
The disconnect wasn’t about disagreement, but about language. Diligence tended to move forward more efficiently when conversations expanded beyond a single benchmark to include multiple reference points: Bitcoin as an anchor, strategy-relevant indices to reflect return generation, and peer or manager-based universes to provide context. Shared benchmarks didn’t eliminate differences in perspective, but they reduced friction and clarified evaluation.
At the same time, the benchmarking landscape continued to mature. Large, established index providers with deep experience in traditional markets began building digital asset indices designed to reflect market behavior with institutional rigor. This added familiarity for allocators and introduced reference points for managers that more closely resembled the frameworks used across other asset classes, reinforcing the move toward more consistent and comparable evaluation standards.
What this means for 2026
If allocator behavior continues along this path, the implications for 2026 are becoming clearer.
Standardization moves from differentiator to baseline. Managers are increasingly expected to present information in a consistent, comparable way that fits into existing allocator workflows. The absence of standardization is no longer acceptable. It creates friction and slows decision-making.
Investment diligence is evaluated holistically. Performance still matters, but it is assessed alongside how clearly a strategy is positioned, how risks are articulated, and whether the return profile makes sense within a broader portfolio. Allocators are spending less time debating outcomes in isolation and more time understanding how those outcomes are generated and sustained.
Operational diligence becomes one of the primary filters. As allocators engage with fewer managers more deeply, operational readiness increasingly determines who advances in the process. The ability to clearly explain operational structure, controls, counterparties, and dependencies is often what separates managers who remain in consideration from those who stall early.
Communication is no longer optional. Managers are judged not just on what they report, but on how consistently and proactively they communicate, particularly during periods of stress. Clear, timely communication helps allocators maintain context and confidence when performance is under pressure.
For many institutions, 2026 presents an environment which is less about initiating exposure and more about deciding which strategies clear a higher bar for inclusion. Approval processes, manager pipelines, and internal frameworks are being built now with that decision in mind.
A more accessible and more selective market
By the end of 2025, digital asset investing felt more accessible to institutions and more demanding at the same time. Regulation expanded access, while allocator behavior established higher standards.
Active management in 2026 will be shaped by who’s prepared to meet those standards.
While the market is still learning what it means to be fully mature, it is becoming more governable, which is a shift that will continue to define the space.
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At Crypto Insights Group, our focus is on bringing more structure, transparency, and consistency to how digital asset strategies are evaluated and communicated across the market.
