Operational Due Diligence is a comprehensive assessment of a firm’s non-investment related processes, systems, and controls. This evaluation covers areas such as technology infrastructure, cybersecurity, risk management, and administrative procedures. In the digital asset sector, it critically examines a crypto firm’s operational robustness and resilience. It ensures that a company can reliably execute its services and protect client assets.
Context
Operational due diligence has become increasingly critical for institutional investors considering exposure to digital assets. News reports often highlight the importance of thorough operational reviews for crypto exchanges, custodians, and fund managers. A lack of robust operational controls has been cited as a contributing factor in several high-profile crypto failures, driving demand for stricter evaluations.
The SEC Staff's no-action relief provides a critical, compliant pathway for Registered Investment Advisers to custody client digital assets via state-chartered trusts.
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