Chris Rayner-Cook is clear about what running digital assets actually asks of a manager, and it is less about the instruments than most people assume.

"Digital assets are not simply traditional markets with a different set of instruments," says the chief investment officer of Brevan Howard Digital. "The operational challenge comes from the combination of continuous trading and fragmented market infrastructure."

That distinction sits at the centre of a decision most hedge funds have now made. In the latest Hedgeweek® report titled “Getting Institutional: State of Digital Assets in Hedge Funds 2026”, over half of the managers surveyed report no current plans to allocate. A further 10% are exploring without having committed capital.

The interesting part is what is keeping them out.

It is not fear, and it is not a skills gap

Reputational concern, the barrier the industry has worried about for a decade, was cited by 8% of respondents. Lack of internal expertise was cited by nobody at all, at any firm size, in any region, despite being the easiest answer a manager could give.

What managers actually say is that digital assets sit outside what their fund is for. Over a third chose that answer, rising to more than half of those who gave a substantive reason. Behind it sit operational and infrastructure readiness, compliance constraints and a wish for greater market maturity.

There is a structural cost too, and it is not obvious from the strategy case. "Allocators work from allocation pockets," says Khalid Mazouz, co-founder and chief investment officer of M55 Capital. A fund is assigned to a pocket by its asset class before its strategy is examined. Two systematic funds with comparable risk controls land in different pockets and are measured against different peer groups purely because of what they trade.

For an equity long/short manager weighing a sleeve, that is a real deterrent. The sleeve may not improve how the fund is categorised, and it definitely complicates how it is diligenced.

What the committed firms built first

Rayner-Cook's account of what the asset class actually demands explains why the hesitation is rational, and also what it costs to overcome.

Prime brokerage is the clearest case. In traditional markets, managers access execution, financing and custody through established, integrated relationships. In digital assets, coverage and integration vary across assets and venues. "Managers therefore need to take greater responsibility for connecting those functions and understanding where assets sit, how they are protected and how quickly collateral can be moved," he says.

Nor is there a market-wide close to organise the day around. Reconciliation, maintenance and risk monitoring have to work while markets stay live, with clear ownership of any response at any hour. Custody brings its own requirements around private-key security and transfer permissions.

"These differences make operational capability part of the investment process," he says. "The challenge is not just accessing digital assets. It is building institutional-grade infrastructure that can operate at the speed and cadence of digital markets."

The survey suggests newer entrants underestimate exactly that. Managers who have added a digital asset sleeve to a traditional book are markedly more confident in their infrastructure than crypto-native firms, who have had longer to find out where it breaks.

The abstainers may be right that digital assets are not for their fund. The ones considering it should know that the hard part starts after the allocation decision, not before it.

Getting Institutional: State of Digital Assets in Hedge Funds 2026, produced in partnership with Arcesium, surveys 100 hedge fund managers on why most funds stay out of crypto, where the allocated see the alpha and what breaks operationally as strategies multiply. 

[Download the report for free here]