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SBAI Publishes a Guide to Operational Due Diligence of Crypto Assets

16 November 2021
 
Today, the SBAI, a global alliance of alternative investment managers and allocators and custodian of the Alternative Investments Standards, released a new Toolbox memo providing guidance on completing operational due diligence on crypto assets. The memo can be found in the SBAI Toolbox for Crypto Assets.

Crypto assets were once the purview of retail investors, but more recently the asset class has gained attention from institutional allocators and alternative asset managers. There are dedicated crypto funds specialising in digital assets, however some more traditional hedge fund managers are now allocating to this asset class.

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.

Steven D’Mello, Partner, Operational Due Diligence – Albourne Partners said: “ODD of crypto assets requires a more in-depth look into certain operational risks. The infrastructure is still in its infancy, and whilst it is becoming more institutionalised, careful attention needs to be paid. This memo from the SBAI continues its work on improving industry outcomes by providing a valuable toolkit for allocators to understand where the risks might be different from more traditional asset classes and provide guidance on the types of questions that should be asked in due diligence processes.”

Sebastian Bea, President of One River Digital – One River Asset Management said: “Trading crypto assets requires that responsible practices and control processes are in place the same as for any other asset class. This SBAI Toolbox memo gives guidance to asset managers on crypto specific questions that may be asked during due diligence and is also an important resource for asset managers to ensure they have robust controls in place for the risks specific to crypto assets and therefore maintaining high standards throughout the alternative investment industry.”

Maria Long, Research and Content Director of the SBAI said: “Our mission is to solve for better and improve industry outcomes. We believe that responsible practices, robust controls, and efficient and transparent due diligence processes are vital to these outcomes. This Toolbox memo provides guidance for asset managers on the controls that should be in place and assists  allocators with their due diligence processes.”  


This toolkit was produced with input from both allocators and asset managers. The SBAI community is made up of over 150 asset managers representing over $2 trillion in AUM and over 90 institutional investors overseeing $4 trillion in assets.

For more information on the SBAI or our work on investor due diligence or to join the SBAI community please contact us at info@sbai.org. 


About the Standards Board for Alternative Investments (SBAI)

At the SBAI, we are an active alliance of managers and investors dedicated to advancing responsible practices, partnership, and knowledge in the alternatives industry. At our core is a community that is committed to knowledge sharing, informed dialogue, and innovation. We set clear standards and actively promote responsible practice to normalise quality and fairness. Together, our community of allocators and managers create real world solutions – in short, we solve for better.

More information about our work can be found at www.sbai.org or reach out to us at info@sbai.org
 
–  ENDS  –
Notes to Editors:
1.    The Trustees of the SBAI are:
  • Mario Therrien, Head of Investment Funds and External Management, Caisse de dépôt et placement du Québec (Chair)
  • Luke Ellis, CEO, Man Group plc (Deputy Chair)
  • Leda Braga, CEO, Systematica Investments
  • Jane Buchan, Founder, Martlet Asset Management
  • Clint Carlson, President & CIO, Carlson Capital
  • John Claisse, CEO, Albourne Group
  • Stuart Fiertz, Co-Founder & President, Cheyne Capital Management
  • David George, Deputy Chief Investment Officer, Public Markets, Future Fund Australia
  • Chris Gradel, Founder, PAG
  • Richard Lightburn, CEO, MKP Capital Management
  • Daniel Stern, Co-Founder and Co-CEO, Reservoir Capital Group
  • Betty Tay, Managing Director, Head of External Managers Department, GIC
  • Paula Volent, Vice President and Chief Investment Officer of The Rockefeller University
  • Dale West, Senior Managing Director, Teacher Retirement System of Texas
  • Poul Winslow, Senior Managing Director, Global Head of Capital Markets and Factor Investing, CPP Investments
2.    The Founders of the SBAI are: 
  • Brummer and Partners
  • Cheyne Capital
  • CQS
  • Man Group
  • Marshall Wace
  • Sculptor Capital Management
  • Winton
3.    The Core Supporters of the SBAI are: 
  • 400 Capital Management
  • abrdn
  • Acadian Asset Management
  • Albourne Partners Limited
  • Angelo Gordon & Co., L.P.
  • BlackRock
  • Blackstone Alternative Asset Management
  • BlueBay Asset Management
  • Bridgewater Associates
  • Canyon Partners, LLC
  • Capital Fund Management
  • Carlson Capital
  • Citadel
  • Fiera Capital Corporation
  • HPS Investment Partners
  • Graham Capital Management
  • Ionic Capital Management LLC
  • Lafayette Square Holding Company LLC
  • LFIS Capital
  • Magnetar Capital
  • Orchard Global Asset Management
  • PAG
  • Pictet Asset Management
  • PIMCO
  • Polar Asset Management Partners
  • Reservoir Capital Group
  • Springs Capital
  • Two Sigma Investments
  • Whitebox Advisors LLC
4.    APAC Committee: 
  • Ted Lee, CPP Investments (Chair)
  • Frances Chang, Noah Holdings (HK) Limited
  • David George, Future Fund Australia
  • Chris Gradel, PAG
  • Richard Johnston, Albourne Partners
  • William Ma, Independent Advisor
  • Brian Pohli, Independent Advisor
  • Betty Tay, GIC
  • Danny Yong, Dymon Asia Capital (Deputy Chair)
5.    EMEA Committee:
  • Elena Manola-Bonthond, CERN Pension Fund (Chair)
  • Doc Horn, Pictet Asset Management
  • Angela Borrett, Albourne Partners Limited
  • Patrick Bronger, APG Asset Management
  • Erik Eidolf, Nordkinn Asset Management
  • Stuart Fiertz, Cheyne Capital Management (UK) LLP
  • Fiona Frick, Unigestion
  • Roy Kuo, Church Commissioners for England
  • Kai Rimpi, Varma Mutual Pension Insurance Company
  • Martin Tornqvist, Capital Fund Management
6.    North American Committee:
  • Ed O’Reilly, Citadel (Chair)
  • Bradley Belt, Orchard Global Asset Management
  • Clint Carlson, Carlson Capital
  • John Claisse, Albourne Partners
  • Anoop Dhakad, HPS Investment Partners, LLC
  • Derek Drummond, State of Wisconsin Investment Board
  • Samantha Foster, University of Southern California
  • John Richardson, Ionic Capital Management
  • Priti Singh, Canada Pension Plan Investment Board
  • Sapna Vir, New Holland Capital
  • Karl Wachter, Magnetar Capital
  • Kirk Wickman, Angelo Gordon & Co., L.P.
7.    Investor Chapter Members include (please click to see the full list):
  • Alberta Investment Management Corporation
  • APG Asset Management
  • Caisse de dépôt et placement du Québec
  • CPP Investments
  • CERN Pension Fund
  • Church Commissioners for England
  • Employees Retirement System of Texas
  • Future Fund Australia
  • GIC
  • Japan Post Bank
  • J Paul Getty Trust
  • Mitsui & Co. Pension Fund
  • Ontario Teachers’ Pension Plan
  • State of Wisconsin Investment Board
  • Teacher Retirement System of Texas
  • University of Toronto Asset Management
  • University of Southern California
  • Utah Retirement Systems
  • UTIMCO
  • Varma Mutual Pension Insurance Company
8.    Signatories (please click to see the full list)
9.
In July 2014, the SBAI became an affiliate member of the International Organization of Securities Commissions (“IOSCO”). 
 
  
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