By Chris Lawn, CEO, Elwood Technologies

For years, institutional adoption of digital assets was slow, hampered by concerns over legitimacy, security and regulation.  But more recently, some of the world's largest financial institutions — including hedge funds, global asset managers and investment banks — are now exploring the digital asset space with increasing interest.

Unlike early adopters of digital assets, these institutions often have sophisticated requirements shaped by decades in traditional markets. Rather than experimenting, they aim to operate at scale and with similar efficiency, oversight, and security they expect in equities, FX, or fixed income. However, in digital assets, they face a more fragmented ecosystem, evolving regulations, and the challenges of a 24/7 market.

At Elwood, our team of market specialists offer deep expertise and hands-on support to help institutions navigate the complexities of digital asset markets. Throughout our conversations, several key themes have emerged.

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Market Access: A Key Component of Institutional Trading

Institutional investors normally look for seamless access to liquidity. However, digital asset markets have greater fragmentation with liquidity dispersed across exchanges, OTC desks, market makers and on-chain.

Emerging regulatory frameworks such as the EU's Markets in Crypto-Assets (MiCA) also introduce requirements for transparency and fair pricing. As a result, institutions may need to demonstrate they are seeking competitive prices, making broader market access and execution capabilities increasingly important.

To meet these needs, institutions are likely to seek execution tools that offer broader connectivity, direct market access, and advanced trading algorithms. Systematic trading firms, in particular, often require a low-latency, high-throughput, multi-venue solution to help trade efficiently and at scale.

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Portfolio Management: Real-Time, Comprehensive Insights

Real-time visibility into positions, P&L and exposures helps portfolio managers to manage certain risks and supports the firm's operational responsibilities and internal standards.

This often means there is a need for flexible infrastructure that integrates with existing frameworks, providing real-time risk metrics, live and historical P&L tracking, position reconciliation, and detailed transaction reporting. Institutions may also benefit from advanced tools for VaR analysis and multi-allocation workflows. Additionally, seamless connectivity with fund administrators is a key component to streamlining reporting.

Ultimately, these capabilities should be sophisticated enough to function as a firm’s Investment Book of Record (IBOR). Without them, institutions may find digital asset trading operationally challenging.

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Risk Management: Advanced Controls for a 24/7 Market

Digital asset markets never close. Risk can emerge at any time – overnight, on weekends,  during geopolitical events or with news headlines. Managing these risks effectively requires real-time monitoring, scenario analysis tools, and stress testing capabilities.

To address this, institutions benefit from tools that allow them to model different market conditions, assess potential portfolio shocks, and evaluate the impact of volatility. Automated alerting systems can help firms respond proactively to market shifts, enabling them to adjust risk exposure dynamically. A fully integrated risk management framework supports institutions in navigating the complexities of a 24/7 market environment.

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The Bottom Line: Meeting Institutions Where They Are

Crypto market infrastructure has been slowly changing and technology has been the bridge helping institutions adopt digital assets. Effectively navigating this market involves, amongst others, a strong bridge that enables seamless execution, real-time portfolio visibility, and robust risk controls, alongside a deep understanding of market complexities.

As digital asset markets continue to evolve, institutions may benefit from technology and expertise that help them navigate execution, risk, and operational challenges. Those that establish the right foundation may be better positioned to integrate digital assets into their broader investment strategies.

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For institutional clients only. Not for retail.

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