Operational Due Diligence on Crypto Assets

Institutional allocators conduct operational due diligence (ODD) on the underlying managers and funds that they invest in, including on elements such as counterparties, valuation, and conflicts of interest.

Crypto assets operate using different infrastructure than more traditional asset classes, therefore any ODD must take account of certain risks that are more prominent within this asset class.

The SBAI’s Alternative Investment Standards help asset managers apply the required controls to satisfy an ODD process and specific standards are referenced throughout this memo.

This SBAI Toolbox memo looks at:

• Key areas of ODD for crypto assets, including custody, trade processes, valuation and asset verification, conflicts of interest, and regulatory risk.
• Other ODD considerations including a brief look at crypto assets and responsible investment.

The appendices contain a list of ODD questions for investors to ask and a glossary of common crypto asset terms.