Crypto Fund Operations: Lessons from Standard Crypto’s Playbook

Ashley Sweren, COO/CCO at Standard Crypto, shared on the Investment Management Operations podcast episode 57 how to manage operational risks in crypto VC. Key challenges? Tracking staking rewards, navigating slashing penalties (where validators lose tokens for network violations)*, and ensuring AML/KYC compliance. Unexpected tax hits, like ECI from staking for non-U.S. LPs, can also trip up funds.

For crypto and blockchain fund managers, these nuances demand regulatory savvy. SEC and CFTC rules on digital assets, plus tax implications, require airtight structures to protect investors and avoid penalties.

At Sabal Law PLLC, our Big Law, family office, and regulator roots give us a unique edge in crafting compliant crypto funds. We represent GPs structuring venture financing and LPs investing in digital assets, ensuring your fund hits the right notes. Our incubator platform offers alternative fee arrangements, supporting emerging managers and non-U.S. funds seeking ERA status. Schedule a Consultation to keep your crypto fund on beat!

*Definition of Slashing in the Crypto/Digital Asset/Blockchain Sector: Slashing: In the context of crypto, digital assets, and blockchain, slashing refers to a penalty mechanism in proof-of-stake (PoS) networks where a validator’s staked tokens are partially or fully confiscated for malicious behavior or network rule violations, such as double-signing transactions or being offline during validation. Slashing ensures network security and incentivizes honest participation.