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Due Diligence Matters - June 2026 Bulletin

About perfORM: Operational Due Diligence Specialists for Investment Managers,  Allocators and Service Providers

perfORM is an award-winning, internationally operating due diligence firm, with presence across the UK, Switzerland, USA, and UAE. We are a standalone ODD solutions provider with 150+ years of collective ODD experience. 

The ‘ORM’ in perfORM stands for Operational Risk Mitigation. 

We serve a global and diverse client base, including: 

  • Investment managers seeking validation of their operational controls
  • Allocators – family offices, multi-family offices, private banks, wealth managers, funds of funds, asset managers, pension funds, endowments, and foundations – requiring robust third-party operational due diligence on their manager relationships
  • Third-party service providers and, sports teams

Crypto Corner…

Six months is a long time in crypto. At the mid-point of 2026, digital asset prices were under pressure with BTC down 26% year to date, and 48% below its $126k all-time high in October 2025, with plenty of volatility seen so far this year. This compares sharply with the S&P 500 8% and NASDAQ 11% gains driven by a combination of strong earnings and the AI trade. Against this backdrop, we have highlighted a few developments of interest, positive and negative, that we see as relevant to operational due diligence on digital asset investment managers.

Regulatory 

The US regulatory environment under the current administration continues to be a tailwind, with pro-crypto Paul Atkins becoming SEC chair in mid-2025. The Genius Act, which covers stablecoins, comes into effect from January 2027. The Clarity Act is on less stable ground. The Act recently cleared the Senate Committee and is awaiting a final floor vote though there remains a lot of doubt whether this new piece of legislation will survive the forthcoming mid-term elections and then in what form. It is hoped the Clarity Act, if voted on and passed, will provide clear categories for digital assets, and define the regulatory perimeters of the SEC and CFTC. These new regulations would combined reduce uncertainty and be supportive to the development of the US digital asset investment manager industry.

Outside of the US, the EU’s all-encompassing Markets in Crypto-Assets (MiCA) comes into effect from 1 July 2026, and the UK FCA’s authorisation gateway for the new crypto asset regime opens 30 September 2026.

Institutional adoption

The institutional adoption of digital assets continues at pace. The CME Group officially launched 24/7 continuous trading for perpetual futures and options as of 29 May 2026, carrying up to 50:1 leverage. Large financial institutions, such as JP Morgan, Citigroup and Charles Schwab have begun offering digital asset services to clients, including institutional custody. This further widens the infrastructure options for managers.  

AI and cyber risk 

AI is developing at a fast pace and powerful new models are capable of identifying software vulnerabilities. Much has been said about Anthopic’s Claude Mythos model, although this is not yet widely available. In the crypto space, a security researcher recently used a newly released model to uncover a critical flaw in the code underlying the privacy coin Zcash’s Orchard pool, which was undetected for four years, and which could have permitted unlimited token minting. The vulnerability was patched, but the token lost 60% of its value upon announcement. This is an emerging threat vector for web3 projects, and one we assume investment managers and smart contract auditors will be factoring into their due diligence.  

Continued exploits and breaches

Large hacks and exploits have continued to occur in 2026, with an estimated $840m in losses across more than 75 confirmed incidents. Cross-chain bridge infrastructure remains a dominant attack vector, with the $290m KelpDAO exploit alone in April 2026 as a prime example. Allocators should evaluate a manager’s contingency planning for network-level events, including liquidity access during chain halts, counterparty exposure to affected protocols, and the adequacy of any insurance or indemnification arrangements.

On the ODD front…

In the current market environment, we have been seeing less Allocator led activity in the investment manager space, with service provider reviews attracting more interest.  Key operational risk items continue to centre on counterparty exposure, asset security and custody, and DeFi related issues. 

An interesting recent topic was around exchange connectivity and the dependence on exchange’s APIs for order routing, portfolio management, and data retrieval. APIs are prone to outages, latency spikes, version changes or rate limits which can disrupt trading, leading to missed executions, partial fills, or inability to rebalance during periods of stress. Normally we would see managers building resilience into their trading systems to handle API risk, including real-time monitoring, and failover procedures (e.g., manual execution). We saw a recent case where an exchange rate limit had not been fully handled by a manager’s trading system leading to trading issues.  

As ever, we remain focused on helping to navigate these evolving operational risks for our clients.

perfORM’s ODD Report Solution: Operational Due diligence for Investment Managers and Allocators 

perfORM’s ODD Report Solution is not just another tick in a box, it is a fast growing and innovative approach to operational due diligence. A pragmatic solution for investment managers and service providers which engage us to complete an ODD review.

“We believe in operational excellence, doing things ‘the right way’ and holding ourselves accountable for delivering institutional-grade asset management. Working with perfORM to review our processes thoroughly is key to ensuring our investors have independent insight, understanding, and confidence in how we manage their assets. We appreciate the perfORM team’s forensic review of our documentation and processes and look forward to collaborating again” – Investment Manager ODD Report Solution client

Contact perfORM to discuss ODD support or to receive a sample ODD report.

You can also read our May bulletin edition and watch our new video which introduces perfORM and each of our of core ODD services.

ODD Report Solution Clients