As we move into the Q2 of 2025, crypto hedge funds are poised at a crucial inflection point. Confidence in the digital asset space continues to rebound, driven by regulatory progress, growing institutional interest, and increasingly sophisticated strategies. Drawing from insights in the 6th Annual Global Crypto Hedge Fund Report published by AIMA and PwC in late 2024, we identify key themes that will shape the crypto hedge fund landscape in 2025.
Rising Investment in Digital Assets
Almost half (47%) of traditional hedge funds now have exposure to digital assets — a significant rise from 29% in 2023. This increase is largely driven by growing regulatory clarity and the approval of spot crypto ETFs in key markets like the U.S. and Asia.
Strategic Shift Toward Derivatives
A clear evolution in strategy is underway: 58% of traditional hedge funds now trade digital asset derivatives, up from 38% last year[which year 2023??], while spot trading has fallen sharply to 25%. This reflects a growing maturity and sophistication in how hedge funds approach the asset class.
Tokenisation Gaining Traction
33% of hedge funds are exploring or committed to tokenisation, compared to 25% last year. Among crypto-native funds, 12% are already investing in tokenised assets, although regulatory hurdles continue to slow broader adoption.
Institutional Demand Increasing
43% of traditional hedge funds, regardless of current crypto exposure, report increased interest from institutional clients. Family offices and high-net-worth individuals remain the largest investor groups in digital asset funds.
Hesitation Remains Among Non-Adopters
Despite growing traction, 76% of hedge funds not yet in the space say they are unlikely to invest within the next three years — up from 54% in 2023. The most cited barrier is the exclusion of digital assets from current investment mandates, now the top concern.
What to Expect
In 2025, we anticipate:
- Continued growth in hybrid hedge fund models that blend traditional and digital asset strategies
- Increased uptake of SPC structures to ring-fence risk across crypto strategies
- Rising regulatory alignment between offshore jurisdictions and major markets, making Cayman Islands structures even more attractive
- Expanding interest in Web3, DeFi, and tokenised fund shares as operational infrastructure matures
As James Delaney of AIMA aptly noted, "A steady recovery in confidence is underway," fuelled by regulation, product innovation, and infrastructure growth. 2025 will be a pivotal year in moving digital assets further into the institutional mainstream.
How Stuarts Can Help?
At Stuarts, our expert Fintech and Investment Funds attorneys advise on every stage of fund formation, tokenisation projects, and digital asset structuring. Whether you're launching a crypto hedge fund, establishing a Cayman SPC, or seeking advice on regulatory obligations under the Private Funds Act, the Mutual Funds Act or the Virtual Asset Service Providers Act, we can assist. From structuring advice and offering documents to service provider onboarding and registration with the Cayman Islands Monetary Authority.
We also offer specialist advice for Web3, DAO, DeFi, and NFT projects, providing full-service support across fund and fintech landscapes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
