Bitcoin Updates: Trump-Era Regulatory Changes Open Crypto Access to Hedge Funds

Trump’s Crypto-Friendly Stance Attracts Hedge Funds to Digital Markets

Hedge funds are ramping up their investments in cryptocurrencies, spurred by clearer regulations under President Donald Trump and a growing wave of institutional participation. According to a global study by the Alternative Investment Management Association (AIMA) and PwC, 55% of hedge funds now have crypto assets in their portfolios, a rise from 47% in 2024, with an average portfolio allocation of 7%, as noted in

. This represents a notable change for an industry that has long been cautious about crypto’s volatility. Trump’s supportive measures—such as the GENIUS Act, which set standards for stablecoins—have eased regulatory concerns, .

The U.S. government’s positive approach to digital currencies has been a major driver. Trump’s administration brought in regulators favorable to crypto and established a Strategic

Reserve, lending greater legitimacy to the industry, . James Delaney from AIMA highlighted that regulatory obstacles are “beginning to fall away,” calling this year’s findings a “watershed moment” for hedge funds, according to . The trend is also fueled by a fear of missing out on crypto’s rapid gains, even as recent market shocks—like a $20 billion liquidation in October—underscore ongoing risks, according to .

Derivatives are the preferred tool for hedge funds, with 67% of those exposed to crypto using them to speculate on price shifts without directly owning the assets, the AIMA and PwC survey showed. This marks an increase from 58% in 2024, indicating a shift toward managing risk through futures and options. At the same time, spot trading—direct transactions of cryptocurrencies—rose to 40% of hedge fund activities from 25%, based on the Bloomberg report. Bitcoin ETFs have also gained traction, with 33% of funds utilizing them in 2025, up from 25% the previous year, according to the same Bloomberg coverage.

Institutional involvement is spreading beyond conventional hedge funds. Firms like BlackRock, Fidelity, and MicroStrategy now hold Bitcoin, and governments in the U.S., Canada, and El Salvador have added it to their reserves, as

pointed out. Decentralized finance (DeFi) is also gaining momentum, with 43% of traditional hedge funds planning to expand into DeFi within three years, per the Bloomberg report. Still, some warn of broader risks, as the October flash crash revealed weaknesses in leverage and market infrastructure, the AIMA and PwC survey cautioned.

Debate over regulation is ongoing.

has recently called on the U.S. Treasury to avoid excessive regulation when enacting the GENIUS Act, warning that too many restrictions could hinder innovation, . On the other hand, lawmakers like Senator Elizabeth Warren have argued the law doesn’t go far enough, describing it as a “lenient regulatory framework for crypto banks.” This push and pull between encouraging growth and ensuring stability highlights the sector’s ongoing evolution.

Robinhood, for its part, is still taking a measured approach. Although its crypto revenue has tripled year-over-year to $268 million, the company’s leaders have not yet decided whether to add Bitcoin to its corporate holdings,

. The fintech firm’s executives stress the importance of balancing capital efficiency, international growth, and shareholder value before adopting a crypto-based treasury strategy, according to .

As hedge funds increase their involvement in crypto, the market’s future will depend on finding the right regulatory balance. While Trump’s initiatives have opened new doors, recent volatility and ongoing debates about derivatives, DeFi, and stablecoins underscore the need for rules that manage risks without curbing innovation. For now, momentum remains strong, with 71% of surveyed funds planning to boost their crypto allocations in the coming year, according to the Bloomberg report.