Regulatory Fog Slows Crypto Fundraising Despite Trump Promises
Survey revealed majority still expected positive policy surprises despite six-month fundraising shortfall
Fund flow in digital asset investment vehicles has fallen short of lofty expectations, according to a new report that highlights the growing disconnect between US President Donald Trump’s administration rhetoric and market reality.
Despite the administration's bullish stance on cryptocurrency, which fuelled early optimism across the sector, a combination of regulatory uncertainty and macroeconomic headwinds has tempered investor enthusiasm, the Crypto Insight Group's Hedge Fund Outlook 2Q25 reveals.
The findings underscore a paradox that has emerged in Trump's second term: While verbally supportive of the crypto industry, his administration has yet to deliver the regulatory clarity that institutional investors crave before committing significant capital.
Institutional crypto investment vehicles continue to see positive net inflows, but at a pace significantly slower than projections made earlier this year.
"Hopes of some sort of clear regulatory framework by June may have been a bit optimistic," said Laura Vidiella del Blanco, head of investor relations for digital assets at VanEck, suggesting that the industry's timeline for regulatory certainty was overly ambitious.
This lack of concrete regulatory progress has left many institutional investors in wait-and-watch mode, unwilling to substantially increase their crypto exposure without clearer guidelines on token classifications, stablecoin governance, and overall market structure.
Compounding the regulatory challenges, Trump's aggressive tariff policies have introduced unexpected volatility across markets. Bitcoin's drop to a six-month low of $76,000 reflected the digital asset market's vulnerability to broader macroeconomic policy shifts.
"Trump's tariffs have already unleashed mayhem in global markets and destroyed trillions of dollars in value, his inconsistent and unpredictable rhetoric has shaken investor confidence and raised fears of a full-blown return to 1930s-style protectionism," said Chris Solarz, chief investment officer of Amitis Capital.
The turbulence has forced fund managers to recalibrate risk parameters, contributing to the slower pace of institutional crypto adoption.
The report reveals a crypto community sharply divided on the implications of Trump's geopolitical positioning:
36% believe Trump's international moves will delay institutional crypto adoption
34% expect his policies to accelerate adoption
30% anticipate no significant impact
This three-way split highlights the uncertainty permeating the market as investors attempt to parse the administration's sometimes contradictory signals.
Despite the headwinds, a majority of fund managers remain cautiously optimistic about policy developments.
The survey found 52% expect positive policy surprises in the coming 12 months, particularly around token classifications and stablecoin legislation. Only 10% anticipate negative policy developments, while 40% expect policy decisions to align with market expectations.
This enduring confidence suggests the crypto industry maintains faith in the administration's long-term commitment to fostering innovation in the digital asset space, even as short-term volatility and regulatory delays test their patience.
For Wall Street, the findings suggest that integrating crypto assets into mainstream financial portfolios may proceed more gradually than initially anticipated under the Trump administration.