Brevan Howard Digital's CIO on what it actually takes to run digital assets

Chris Rayner-Cook, chief investment officer at Brevan Howard Digital, explains that managing digital assets involves more than just the instruments themselves. The operational challenges lie in the continuous trading and fragmented market infrastructure. According to a recent Hedgeweek® report, "Getting Institutional: State of Digital Assets in Hedge Funds 2026," around half of the surveyed managers have no current plans to allocate to digital assets, while 10% are exploring without committing capital.

The primary barrier identified is a lack of internal expertise, despite it being an easy answer not typically given by managers. The main reasons cited are that digital assets do not align with the fund's purpose, operational and infrastructure readiness, compliance constraints, and a desire for greater market maturity. Another significant factor is the structural cost of allocating capital to digital assets.

Hedge fund managers typically allocate capital within predefined pockets based on asset classes, and digital assets often fall into different pockets due to their trading patterns. This forces managers to reevaluate their fund's categorization and diligencing process, which can be a deterrent. Rayner-Cook highlights that when hedge funds first started considering digital assets, prime brokerage coverage and integration varied significantly across assets and venues.

Managers needed to take greater responsibility for connecting these functions and understanding the protection and collateral movement processes. Additionally, there was no market-wide close to organize trading activities, requiring continuous monitoring and reconciliation. Custody requirements, such as private-key security and transfer permissions, also added to the operational burden.

Newer entrants often underestimate the need for institutional-grade infrastructure to operate at the speed and cadence of digital markets. The survey indicates that managers who have added digital assets to their traditional strategies are more confident in their operational capabilities compared to crypto-native firms, which have had more time to identify and address operational challenges.