Hedge funds have markedly increased their exposure to cryptocurrencies amid a shift in U.S. policy signals. According to cited data, the proportion of hedge funds holding crypto rose to 55% in 2025 (from 47% in 2024). This changing regulatory environment has influenced capital reallocation across managers, custodians and providers of listed products.
Executive actions, appointments and legislation accelerated adoption. On January 23, 2025 an executive order was signed to “Strengthen U.S. leadership in digital financial technology,” and a President’s Working Group on Digital Asset Markets (PWG) was created with a 180-day mandate to propose a federal framework, signaling regulatory clarity.
The signing of the GENIUS Act in July 2025 established full-reserve backing requirements for payment stablecoins, according to the cited documents. Brief technical definition: stablecoin — a type of cryptocurrency designed to maintain a stable value against a fiat currency or asset; ETF — an exchange-traded fund that replicates exposure to an asset and trades on stock exchanges.
Institutional products saw measurable effects: the prior approval of Bitcoin ETFs by the SEC precipitated a rapid inflow of capital, with roughly $150.000 millones in AUM in these funds by the end of 2025, and BlackRock IBIT attracting around $50.000 millones, according to available data.
Corporations and family offices also increased allocations: it is cited that MicroStrategy held more than $6.700 millones in Bitcoin, and family offices showed higher adoption rates (25%). A cited survey indicated that “47% of institutional investors attributed their increase in crypto allocations to the current regulatory climate,” according to AIMA and PwC.
Implications for Hedge funds
Regulatory clarity and pro-industry appointments reduced operational barriers and spurred capital entry, but risks persist. Market volatility continued — for example, Bitcoin fell from six figures to lower levels following certain executive announcements — and macroeconomic policies can still reverse rapid price gains. There is also international regulatory divergence, including references to frameworks such as MiCA in the EU.
The next milestone noted in the data is the delivery of the PWG’s proposals within the 180-day period from the executive order. The content of those proposals and their translation into rules or practical guidance will determine whether the current wave of institutional inflows consolidates or is reconfigured by new requirements.
In practical terms, the trajectory of institutional allocations will hinge on the PWG’s framework, which will shape how managers, custodians and product providers operationalize exposure and manage risks in the current cycle.
