Foreword
The global hedge fund industry's engagement with crypto/digital assets and blockchain technology has accelerated in 2025, supported by increasing regulatory clarity and new legislation under the second Trump administration in the US, as well as with the emergence of regulatory regimes covering the sector across many other globally important financial markets, including the EU, Hong Kong, Singapore, Switzerland and the UAE. This development marks a transition from years of enforcement-led uncertainty toward a more defined and innovation-friendly regulatory landscape.
Traditional hedge funds (described for this research as those with less than half their AUM in digital assets) are increasing their exposure, with more than half now having some form of exposure to digital assets, often through spot and derivatives trading, exchange‑traded products and increasingly through equities and tokenised assets. Meanwhile, crypto-native hedge funds continue to grow in scale and sophistication, supported by strong price movement in crypto asset markets that earlier this year surpassed US$4 trillion in total market value.
Investor participation is gradually widening beyond family offices and high‑net‑worth individuals to include an increasing number of fund of funds, foundations, endowments, pension plans and sovereign wealth funds. Many investors cite diversification benefits, asymmetric return potential and long‑term outperformance as their primary motivations. These investment patterns signal a maturing market with growing acceptance among institutional allocators of digital assets as an investable asset class.
Market infrastructure remains a critical enabler. Greater advances in custody services, trading platforms, regulatory frameworks and access to banking rails are viewed as key to unlocking further investment flows. Tokenisation, the digital representation of funds and assets on-chain, is rapidly gaining momentum as a structural trend in financial markets. Investment managers are increasingly assessing its potential to expand investor reach and streamline operations, even as the ecosystem continues to mature across areas like regulation, liquidity and integration.
Although not the central focus of this report, the maturation of stablecoins over the past year has been a significant driver of institutional adoption and a tailwind for the growth of tokenised assets. Developments in stablecoins, e.g., across regulation, ecosystem evolution and industry adoption, are also shaping investment patterns to some degree.
As regulatory clarity deepens and institutional grade infrastructure develops, digital assets appear poised to move from the fringes of finance to the mainstream of hedge fund portfolios.
Research Methodology
Key Takeaways
- Hedge funds increase crypto exposure: Exposure to crypto assets has grown with 55% of funds now invested in 2025, up from 47% in 2024. The increasing routes of exposure vary, ranging from spot and derivatives trading to ETFs, crypto bankruptcy claims, and, increasingly, equities and tokenised assets. This acceleration reflects clearer regulatory signals from the SEC’s Project Crypto and OCC IL 1183, marking a decisive shift from enforcement to implementation.
- Regulatory shifts fuel increased institutional participation: 47% of institutional investors say the fast-evolving US regulatory environment is prompting increased crypto allocations. The formalisation of stablecoin oversight under the GENIUS Act is providing institutions with greater confidence around liquidity, custody and settlement. Equities and regulated crypto ETFs have also played a pivotal role in facilitating larger institutional investors’ access to digital assets.
- Just under half of hedge funds remain on the sidelines: Among traditional hedge funds surveyed with no current crypto exposure, around half indicated no plans to enter the market in the near term. Despite improved regulatory clarity, lingering tax and investor mandate barriers echo 2024 themes, signaling that investor education and internal flexibility remain key. If these mandates and other barriers were removed, roughly half who polled would consider investing.
- Tokenised funds poised to reshape asset management: Tokenisation is gaining traction in alternative investments, with 52% of hedge fund respondents now expressing some interest. However, 72% cite legal uncertainty and limited investor demand as barriers.
- Centralised exchanges dominate, but ecosystem maturation gaps persist: Centralised exchanges remain the primary venue for hedge funds trading crypto assets, selected for their creditworthiness, reputation and liquidity. However, gaps still persist in custody, legal/compliance advisory and fund administration services. 41% of institutional investors say they would increase allocations further if these areas improved.
- Hedge funds eye DeFi as the next frontier: 43% of traditional hedge funds with some exposure to crypto are planning to increase or begin engagement with decentralised finance (DeFi) over the next three years. Nearly one-third of these managers also believe DeFi will disrupt their operations within the same timeframe. This may reflect regulators’ growing recognition of hybrid on-chain models within evolving market structure discussions.
AIMA DAWG
The AIMA survey and report was put together with the assistance of the AIMA Digital Assets Working Group (AIMA DAWG), a strategic partner to the industry and a dynamic network of senior industry professionals spanning the institutional digital assets ecosystem. This includes investment managers, allocators and fund service providers united by a shared commitment to fostering innovation and shaping the future of digital assets.
AIMA DAWG is the driving force behind the association’s thought leadership, regulatory advocacy, and the development of robust operational standards – bridging the worlds of digital assets and traditional asset management to support the sector’s continued evolution.
We would like to thank everyone that participated in the survey and shared their insights. If you would like to learn more about AIMA DAWG, please contact Michelle Noyes ([email protected]) or James Delaney ([email protected]).
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