Crypto asset management is an important but often misunderstood discipline in institutional finance. It combines custody, compliance, and performance reporting in real time. Institutions that take crypto seriously know that asset management is the difference between holding risk and managing it.

Below, we’ll explore how institutions are building infrastructure for crypto asset management, including mitigating volatility and developing governance.

What’s in this article?

• Why crypto asset management has become central to institutional crypto adoption
  
• How fund structures, custody solutions, and accounting standards fit together
  
• What tools support portfolio analytics, liquidity, and regulatory compliance?
  
• How can asset managers limit volatility and counterparty exposure?
  
• How do regulators differentiate between asset management and trading activity?
  
• What kind of governance and infrastructure are needed to manage crypto effectively?
  
• How Stripe Payments can help
  

Why crypto asset management has become central to institutional crypto adoption

Over 60% of hedge funds, pensions, and asset managers now hold digital assets, with investors worldwide signaling plans to increase their exposure. As these institutions invest more in crypto, they’ll need controls such as governance, custody, audit trails, and risk limits.

Institutions working with digital assets should be able to answer the following questions:

• Who holds the keys?

• How are assets valued and reported?

• What are the compliance risks?

Asset management provides that scaffolding. Without an asset management framework, crypto exposure is risky and difficult to justify to boards, regulators, and clients. But with the right elements—secure custody, fund structures, accounting clarity—crypto becomes usable. It fits within mandates and can be audited and scaled.

With proper asset management, institutions can participate without compromising security or oversight.

How fund structures, custody solutions, and accounting standards fit together

An institution can’t manage crypto assets at scale without the right legal framework, the right custodian, and the right accounting method. These three pieces make it possible to safely invest in crypto. Without them, the risk is too high.

Here’s a closer look at how these pieces work together.

Framework

Institutions don’t typically hold crypto directly. They invest through vehicles, such as hedge funds, trusts, and exchange-traded products (ETPs), that fit into familiar legal frameworks. The structure determines what the institution can hold, how it operates, and which regulators it answers to.

Here’s a look at a few crypto rules in the US, for example:

• Private crypto funds use exemptions to avoid triggering the Investment Company Act of 1940 (also called the ’40 Act).

• If an investor is trading crypto futures or derivatives, they might need to register with the Commodity Futures Trading Commission (CFTC) as a commodity pool operator.

• A spot Bitcoin is structured as an ETP under the Securities Act of 1933 (’33 Act)—not the ’40 Act—and it is subject to the disclosure and antifraud protections of the ’33 Act.

Custody

Crypto behaves like a bearer asset. Whoever holds the private key controls the asset, which makes custody a risk surface and a regulatory trigger.

When searching for a custodian, institutions must remember to evaluate security practices, regulatory compliance, insurance coverage, and the provider’s track record with digital assets.

Accounting

Guidance such as the updated accounting standards from the Financial Accounting Standards Board (FASB) requires fair value accounting for crypto, including assets marked to market and gains and losses reported in earnings. This replaces the older impairment-only model, which underreported upside and skewed financials.

Now, balance sheets better reflect crypto’s real value. Disclosures, such as cost basis, restrictions, and movements, give regulators and auditors a fuller picture.

Institutions often require clear explanations of how crypto is held, valued, and structured before allocating capital. Coordinating each of these areas—fund design, custody, and accounting—supports a defensible investment framework and makes crypto a viable allocation.

What tools support portfolio analytics, liquidity, and regulatory compliance?

Institutions managing crypto need visibility, execution, and control. That means real-time analytics, access to deep and diverse liquidity, and compliance tools built for both regulators and auditors.

Here’s how institutions get there.

Portfolio analytics

Crypto portfolios are spread across exchanges, digital wallets, custodians, and protocols, making them difficult to monitor.

Modern platforms consolidate portfolios into a single, real-time dashboard that tracks:

• Net asset value (NAV), performance attribution, and value-at-risk (VaR)

• Wallet-level holdings, including on-chain activity, such as staking or limited partner (LP) positions

• Alerts on rule breaches, such as overweight exposure, restricted assets, and liquidity thresholds

Liquidity

Crypto liquidity is scattered across different markets, including centralized crypto exchanges (CEXs), over-the-counter (OTC) desks, and decentralized finance (DeFi) venues, each with a different depth and pricing.

To manage the sprawl:

• An execution management system (EMS) can connect to multiple venues for smart routing

• Liquidity aggregators can unify order books and reduce slippage, with some platforms offering automated rebalancing

• Prime services can enable off-exchange settlement, letting assets remain in custody while still being tradeable

Compliance

More than 84% of institutional investors cited regulatory compliance as their top crypto risk priority in 2025. Managers adept at technology are responding by wiring compliance directly into their trading and custody workflows.

Compliance tracking now monitors:

• The source of funds, via blockchain forensics (e.g., exposure to sanctioned addresses)

• Investor eligibility, through Anti-Money Laundering (AML) and Know Your Customer (KYC) integration

• Trade surveillance and reporting (e.g., Form PF, tax disclosures, transaction logs)

How can asset managers limit volatility and counterparty exposure?

Crypto markets are fast, volatile, and risky, so institutions look for ways to limit their exposure. Asset managers can’t eliminate volatility, but they can design around it.

Here’s how.

Managing volatility risk

• Diversification across tokens and strategies (e.g., Bitcoin, Ether, stablecoins, yield generation) to reduce concentration risk

• Derivatives for hedging—such as options, futures, or perpetuals—to limit downside or implement delta-neutral exposure

• Market-neutral or low-beta strategies, such as arbitrage, yield harvesting, or long-short pair trades, to generate returns without leaning solely on directionality

• Automated risk controls, including stop-loss rules and dynamic rebalancing during drawdowns or after volatility spikes

• Volatility budgeting, which sets a risk ceiling (e.g., a target annualized volatility) and adjusts exposure as needed to stay within bounds

Managing counterparty risk

The lesson from failures is that no one venue should be the single point of failure.

Here’s how asset managers design for counterparty risk:

• Segregated, third-party custody: A large proportion of crypto hedge funds use external custodians rather than keeping their assets on exchange.

• Just-in-time execution workflows: In some institutional setups, assets only move onto exchanges to trade and are otherwise held.

• Diversification across trading venues: Execution systems connect to multiple venues so that no single counterparty holds too much exposure or wallet access.

• Insurance and legal protections: Institutional custody setups typically include crime coverage and contractual indemnification with custodians or prime brokers.

• Proof-of-reserves standards: Some institutions now require this from exchanges or custodians before onboarding.

How do regulators differentiate between asset management and trading activity?

If you manage crypto for others, you’re subject to asset management regulation: adviser registration, custody rules, disclosure obligations, and fund governance. Whether tokens or equities, regulators care how you’re using client capital.

What counts as asset management

You’re managing assets if you:

• Take outside capital and make discretionary crypto investment decisions

• Pool investor funds into a strategy or product (e.g., fund, trust, account)

• Offer yield or “earn” programs that allocate on behalf of clients

• Automate or program investment strategies that run with client assets

Depending on asset type and structure, these activities might trigger regulatory categories, such as “registered investment adviser,” “investment company,” or “commodity pool operator.”

What counts as trading

You’re generally not in the asset management lane if you:

• Trade crypto with your own capital (e.g., proprietary trading)

• Operate a platform that matches buyers and sellers (e.g., exchange, broker-dealer)

• Provide execution or custody, but don’t make investment decisions

The line becomes blurry with activities such as staking-as-a-service or pooled lending, and regulators have intervened. For example, BlockFi’s interest accounts were deemed investment contracts because they pooled customer assets and exercised discretion as to how those assets were deployed for yield.

What kind of governance and infrastructure are needed to manage crypto effectively?

Good governance makes crypto manageable, while infrastructure makes it scalable. Firms handling crypto well build systems to operate with both precision and resilience.

Governance that withstands pressure

Having the right systems sets you up for success.

Top-performing crypto managers tend to:

• Appoint crypto-specific investment and risk committees

• Set policies for custody, exchange use, and asset onboarding

• Define roles with clear separation of duties so that no one person controls a full transaction path

• Run third-party technical, financial, and systemic audits

• Ensure internal controls meet insurance and investor requirements

Infrastructure that’s built for uptime and scrutiny

Good infrastructure hinges on how the technology gets used. Many firms blend external tools with custom layers for oversight, reporting, or automation.

Here are some ways to strengthen your infrastructure:

• Custody: Cold storage, multisignature wallets, multiparty computation (MPC), and just-in-time execution when feasible

• Ops: Whitelisted withdrawal addresses, tiered transaction approvals, and incident response protocols

• Integration: Data flowing accurately across custody, accounting, compliance, and portfolio management systems (PMS)

• Scalability: Systems stress-tested for markets that operate around the clock, volatile volumes, and audit demands

With an effective strategy, infrastructure becomes invisible and governance becomes routine. This way, your firm can move quickly without skipping necessary checks.

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