Inside the Crypto Fund Landscape with Edward Puccio
JAG Conversations is a series of candid discussions with the founders, traders, and allocators shaping the frontier of trading, from digital assets and prediction markets to the emerging desks redefining traditional finance, on where these markets are heading and what it means for the people building them.
Crypto Funds Watch tracks the managers, strategies, and capital flows shaping the digital asset fund industry. Joe Miscioscia, CEO & Founder of Joseph Anthony Group, spoke with its Founder, Edward Puccio, about how the crypto fund landscape has evolved, where alpha is being generated today, how allocator expectations have shifted, and what he is watching over the next year.
The following has been edited for clarity and length.
The State of the Market
Joe Miscioscia: Compared with a year ago, where are the biggest shifts in the market, and where do you think there isn't enough attention?
Edward Puccio: On the fund and asset-management side of crypto, fund launches are near an all-time low, and sentiment has been notably weak. The fund-of-funds and multi-managers that were active a year or two ago have largely consolidated, either through M&A or by winding down. DeFi has changed entirely. A year ago it caught a bid and was arguably the most popular market in crypto; since then it has become much harder to raise capital there. Diligence that used to take a few days now stretches to weeks or months, partly because of the hacks that have hit the space. But the biggest development I'm watching is Robinhood Chain.
Robinhood Chain and Tokenized Collateral
Joe Miscioscia: What is your read on Robinhood Chain, and where do you see it headed?
Edward Puccio: There is considerable meme-coin activity on it today, but that is not where its future lies. The more significant development is what they have built with Morpho. Step one has been bootstrapping Morpho with stablecoins, and they've built up a large supply. The real unlock is letting tokenized assets be used as collateral so users can borrow stablecoins against them, and I don't mean Robinhood Chain users, I mean users on the Robinhood app itself. It will be fully abstracted, one click. A user sees an option to borrow against their Apple stock, clicks once, and behind the scenes that stock is tokenized, posted as collateral on Morpho, and stablecoins are borrowed against it and converted to fiat. To the user it simply looks like a loan against their Apple stock; the entire on-chain process is invisible. That's the biggest unlock I see from a year ago.
Joe Miscioscia: We're very aligned there. We see this convergence on a daily basis, capability gradually moving on-chain while the end-user experience stays familiar. Robinhood Chain is one of the clearest examples of what that actually means for the future of finance: the infrastructure changes underneath, but the user simply sees a simpler product.
Regulation and Vaults
Joe Miscioscia: As tokenization and institutional adoption accelerate, where do you see hurdles or causes for concern on the structural side?
Edward Puccio: On most markets I don't have a strong regulatory view, but on vaults I do. There was a recent SEC statement, from an official who had historically been quite supportive, essentially warning that curating a vault does not exempt you from securities rules. This is not to say vault curators are in jeopardy, but anyone planning to launch a vault or an on-chain fund should proceed with real caution. The SEC could step in and regulate these on-chain products, and they would fall under its scope.
Where the Alpha Is
Joe Miscioscia: Where are you seeing the separation between funds that are struggling and those still generating edge?
Edward Puccio: The best funds are always adapting; that's constant across cycles. Right now the clearest alpha, especially on the market-neutral side, is arbitrage between crypto-native venues like Hyperliquid that list tokenized assets and the TradFi venues that list the same underlying. During the oil rally, a popular trade was Hyperliquid versus CME crude. Crypto itself hasn't been especially volatile over the past six to twelve months outside the latest move, but TradFi has, oil, equities, tech, AI, and the funds that could trade across both captured it.
Joe Miscioscia: Did you see a difference in who captured that, crypto-native funds versus TradFi shops?
Edward Puccio: Funds that were previously active in DeFi were among the first to move on it, along with market makers, both crypto-native and some from the TradFi world. I haven't heard much about the big TradFi multi-managers coming in to capture that specific trade, though that falls outside my primary coverage.
Joe Miscioscia: That tracks with what we see. The crypto-native firms had the natural head start, but the real differentiator was connectivity, the systems to execute across a Hyperliquid, a CME, and equities at once, and to manage collateral and margin fragmented across those venues. At a high level the trade looks obvious; capturing it before it closes takes infrastructure and low-latency execution most desks didn't have in place.
The Evolution of Crypto Fund Capital
Joe Miscioscia: How have the investor base and allocator expectations changed over the years?
Edward Puccio: 2018 to 2019 was the first real wave of the crypto fund space. Actively managed funds were seeded by ultra-high-net-worth individuals and crypto OGs. Through the 2021 to 2022 bull market, the main LP base was still ultra-high-net-worth, whales, OG miners, and founders. Even funds approaching a billion dollars in assets were backed mostly by that capital and maybe one or two institutions, at least in the liquid space; VCs always had their share of pensions, endowments, and UHNW. Right before FTX, around 2022, the large institutions stepped in, and most suffered significant losses. From 2023 into 2024 and 2025, niche fund-of-funds and multi-managers emerged to allocate to a handful of groups, and many later wound down or consolidated.
Edward Puccio: That brings us to today. If you're above roughly $200 million, you're getting looked at by pension funds, endowments, sovereign wealth funds, larger family offices, TradFi fund-of-funds, and the alternatives arms of investment banks. Below that, say $20 to $50 million, it has gotten very hard to raise; the niche allocators that were there have consolidated, and there isn't much capital actively writing checks to smaller crypto funds. Where a smaller manager can still get an edge is with a strong strategy run as a separately managed account, some sizable SMA investors will scale you up, but the bar is very high: strong returns with very minimal drawdowns. Coin-denominated funds, BTC, ETH, and others, still get traction from OG whales and crypto foundations. And there's vault-space interest, but from an entirely different LP set, other crypto funds, protocols, foundations, and UHNW, where margins are very slim and it's hard to do well unless you scale to nine figures.
SMAs and Allocator Expectations
Joe Miscioscia: On SMAs, what do those requirements typically look like?
Edward Puccio: The requirements are close to unachievable. Something like 25%-plus annualized, with very low volatility and maximum drawdowns held inside roughly 5%, in mid- or high-frequency strategies. Some groups genuinely perform at that level and have those sources of return, but for the average trading firm it is very difficult to meet.
Joe Miscioscia: That matches what we're seeing on the ground. We recently spoke with a trader running a profitable strategy at an 8 to 10% maximum drawdown, and the allocator wanted it closer to 4 or 5 before they would get comfortable. Those are the kinds of asks on the SMA side now. Part of the challenge is a disconnect: if the market were clearer with managers up front about what they actually need to target, rather than evaluating purely on a return profile, more of them might clear that bar from day one.
Consolidation and the Multi-Strat Retreat
Joe Miscioscia: What are you seeing on consolidation and firm strategy?
Edward Puccio: A lot of consolidation, funds absorbing or merging with others. In 2024 and 2025 nearly every fund was trying to become a multi-strat, spanning fund-of-funds, market-neutral, and long-only. That has faded. There's a lull; many funds are focused on preserving capital rather than launching new products or pursuing an expansive vision. Performance has been good for some, but until the market clearly turns, most are just continuing to run what works.
Joe Miscioscia: We'd agree the multi-strat push has faded, especially on the fund-of-funds side, where a lot of the platforms that were allocating to external teams have pulled that capital in-house. If anything, the notable new move is into prediction markets, and not as a pivot to sports betting, but as a way to keep some diversification in-house. Firms that have wound down a fund-of-funds business, kept the long-only book and a core market-neutral team, are now asking whether they can apply the same pricing discipline to prediction markets and trade Bitcoin or ETH outcome contracts there.
Edward Puccio: To add to that, nearly every fund that had a DeFi strategy has also rolled out a vault. Outside of prediction markets, that's the main new development I'm seeing.
Joe Miscioscia: How many of those vaults do you think will succeed?
Edward Puccio: Perhaps 10 to 20%. The economics are difficult; you have to scale significantly to generate meaningful revenue, unless you find a less transparent way to monetize, which a few players have. Otherwise the model is very hard to sustain.
Talent
Joe Miscioscia: From the talent angle, how are firms navigating this market? Is it a buyer's market for traders and quants?
Edward Puccio: It's mixed, and talent is more your domain than mine. What I would say is that crypto is unusual in that there is always demand for talent, funds will hire you if you can generate returns, whether on the capital-raising side or the trading side. But there is a real shortage of genuinely talented people in the space, and of people willing to put in the work. If you are talented, you will be hired. The one clear hiring trend I see is groups seeking prediction-market traders; outside of that, I am not seeing a new wave of hiring.
Looking Ahead
Joe Miscioscia: Over the next six to twelve months, where do you think things are headed, and what's your non-consensus view?
Edward Puccio: I'll be watching Robinhood Chain closely; I believe they are building something significant. I'm always monitoring the space for notable fund and allocator launches, and I expect continued M&A in the fund space over the next few months. For a non-consensus view, and one tied to the fund space: over the next one to three years, I don't think the marginal efficiency gains quant firms get from AI will be much greater than they are now. I'm very bullish on AI long-term, and I use it every day, but I expect diminishing marginal returns in the near term. I think AI hits a data wall, and there's a lot of circular financing happening among the big AI companies. I don't think this cycle is different from any other credit cycle. Long-term bullish, near-term a lull.
Joe Miscioscia: I'm aligned on the near-term caution. The most interesting second-order effect I see over the next two to three years isn't the models themselves, it's the selling and trading of compute power. We already trade physical commodities and power markets; apply that same logic to the compute behind these AI systems, priced on usage, and it becomes a genuine new market. Though I'd agree that the circular way many of these companies finance each other means parts of it could unwind.
What Comes Next
That shift, compute becoming a priced, tradable commodity, is already beginning, with the first compute futures now reaching regulated markets. We'll explore what it means for traders in an upcoming piece.
Disclaimer: This interview reflects the personal views of the participants and is provided for informational purposes only. It is not investment advice.