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Hedge funds and crypto investing: Is there a more tailored approach? | Opinion

Author: Content Editor
The article discusses the limitations of hedge funds in the crypto market and highlights the potential benefits of separately managed accounts (SMAs) for institutional investors. It explains that hedge funds' offshore structures are not well-suited for the regulatory environment of the crypto market, and their reporting systems are too slow for the fast-paced nature of crypto trading. In contrast, SMAs offer direct ownership of assets, real-time reporting, and customized investment strategies that align with the crypto market. SMAs also allow for tax optimization, asset diversification, and trading flexibility. The article mentions the emergence of off-exchange settlement services, such as those offered by companies like Copper.co, which provide an extra layer of security for institutional investors. It notes that regulation is also moving in favor of SMAs, as seen in Singapore's recent rules for crypto exchanges. The Japanese regulation that required exchanges to keep customer assets in separate accounts is cited as an example of a safeguard that aligns with the principles of SMAs. The article concludes by suggesting that SMAs will likely become the preferred investment vehicle for institutions looking to acquire digital assets.

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