Key Takeaways
- • Over half of the 100 hedge fund managers surveyed in Hedgeweek's "Getting Institutional: State of Digital Assets in Hedge Funds 2026" report have no current plans to allocate to digital assets, with a further 10% exploring without committed capital.
- • Lack of internal expertise was cited by no respondents at any firm size or region, while reputational concern was cited by just 8%, indicating the main barrier is that digital assets fall outside fund mandates.
- • Brevan Howard Digital CIO Chris Rayner-Cook says operational capability is part of the investment process, with prime brokerage, custody, reconciliation and risk monitoring requiring institutional-grade infrastructure.
- • Allocation pockets structured by asset class can penalize managers who add digital asset sleeves, as funds are categorised and benchmarked against peers based on what they trade, per M55 Capital co-founder Khalid Mazouz.
- • Managers who added digital assets to traditional books report greater infrastructure confidence than crypto-native firms, which have had longer to identify operational failure points.
Summary
Brevan Howard Digital CIO Chris Rayner-Cook argues that running digital assets is less about the instruments than the operational model, noting that "the operational challenge comes from the combination of continuous trading and fragmented market infrastructure." His comments frame a decision most hedge funds have already made. According to the Hedgeweek report "Getting Institutional: State of Digital Assets in Hedge Funds 2026," produced in partnership with Arcesium and based on a survey of 100 hedge fund managers, over half of respondents have no current plans to allocate, and a further 10% are exploring without having committed capital.
The survey indicates that the barrier is not fear or skills. Reputational concern was cited by 8% of respondents, and lack of internal expertise by none. Instead, over a third of managers said digital assets sit outside what their fund is for, a share rising to more than half among those giving a substantive reason. Operational and infrastructure readiness, compliance constraints and a desire for greater market maturity sit behind that answer.
There is also a structural cost. Khalid Mazouz, co-founder and CIO of M55 Capital, notes that "allocators work from allocation pockets," with funds assigned by asset class before strategy is examined. Two systematic funds with comparable risk controls can therefore fall into different peer groups because of what they trade, which can deter an equity long/short manager considering a digital asset sleeve.
Rayner-Cook describes the operational demands that committed firms have had to build. In prime brokerage, coverage and integration vary across assets and venues, so managers must take greater responsibility for connecting execution, financing and custody and for knowing how quickly collateral can move. With no market-wide close, reconciliation, maintenance and risk monitoring must run continuously, and custody adds requirements around private-key security and transfer permissions. "These differences make operational capability part of the investment process," he said.
The survey suggests newer entrants underestimate these demands. Managers who added a digital asset sleeve to a traditional book report markedly more confidence in their infrastructure than crypto-native firms. The report's conclusion, as framed by the article, is that the hard part begins after the allocation decision.
The survey indicates that the barrier is not fear or skills. Reputational concern was cited by 8% of respondents, and lack of internal expertise by none. Instead, over a third of managers said digital assets sit outside what their fund is for, a share rising to more than half among those giving a substantive reason. Operational and infrastructure readiness, compliance constraints and a desire for greater market maturity sit behind that answer.
There is also a structural cost. Khalid Mazouz, co-founder and CIO of M55 Capital, notes that "allocators work from allocation pockets," with funds assigned by asset class before strategy is examined. Two systematic funds with comparable risk controls can therefore fall into different peer groups because of what they trade, which can deter an equity long/short manager considering a digital asset sleeve.
Rayner-Cook describes the operational demands that committed firms have had to build. In prime brokerage, coverage and integration vary across assets and venues, so managers must take greater responsibility for connecting execution, financing and custody and for knowing how quickly collateral can move. With no market-wide close, reconciliation, maintenance and risk monitoring must run continuously, and custody adds requirements around private-key security and transfer permissions. "These differences make operational capability part of the investment process," he said.
The survey suggests newer entrants underestimate these demands. Managers who added a digital asset sleeve to a traditional book report markedly more confidence in their infrastructure than crypto-native firms. The report's conclusion, as framed by the article, is that the hard part begins after the allocation decision.
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