Insights & research

Digital asset glossary

A plain-language reference to the terms that shape institutional digital-asset investing — from fund structures and regulation to strategies, market mechanics, custody and performance. Search or browse by category.

Fund structures & vehicles

AIFM (Alternative Investment Fund Manager): A firm authorised or registered to manage alternative investment funds (funds that are not UCITS retail funds), such as hedge, private equity or digital-asset funds.
AIFMD: The EU Alternative Investment Fund Managers Directive — the regulatory framework governing how alternative investment fund managers operate in the European Union.
AMC (Actively Managed Certificate): A securitised, exchange-tradable product, identified by an ISIN, whose value tracks an actively managed strategy — a wrapper that lets investors access a strategy like a listed security.
Depositary: An independent institution that safekeeps a fund's assets, monitors its cash flows and oversees compliance with the fund's rules — a core investor-protection role under EU fund law.
Fund administrator: The independent party that calculates the NAV, maintains the fund's books and records, and processes subscriptions and redemptions.
Fund of funds: A fund that invests in other funds or managers rather than directly in individual assets, providing diversification and access to specialist strategies through one vehicle.
General Partner / Limited Partner (GP/LP): In a partnership fund, the GP manages the fund and bears management responsibility, while LPs are the passive investors whose liability is limited to their commitment.
SCSp: Société en Commandite Spéciale — a Luxembourg special limited partnership widely used for alternative and private funds, formed of a general partner and limited partners.
Share class: A distinct category of units within a fund or sub-fund, differing in features such as currency, fee level or investor type, while sharing the same underlying portfolio.
SICAV: Société d'Investissement à Capital Variable — an open-ended investment company whose capital varies with subscriptions and redemptions; a common European fund vehicle, often used as an umbrella with sub-funds.
Sub-fund: A separate, ring-fenced pool of assets within an umbrella fund, with its own strategy, share classes and NAV, but sharing the umbrella's legal structure.
Sub-threshold AIFM: A manager whose assets under management fall below the AIFMD thresholds, which is registered (rather than fully authorised) and subject to a lighter, proportionate regime.
Umbrella fund: A single legal fund structure that contains multiple sub-funds, each operating independently while sharing common governance and service providers.

Regulation & compliance

Article 6 (SFDR): The SFDR classification for products that do not promote environmental or social characteristics and do not have sustainable investment as their objective.
CSSF: The Commission de Surveillance du Secteur Financier — Luxembourg's financial regulator, which supervises fund managers, funds and other financial-sector participants.
ISIN: International Securities Identification Number — a unique 12-character code that identifies a specific security, share class or certificate.
KYC / AML: Know Your Customer and Anti-Money-Laundering — the identity-verification and monitoring processes that firms must perform to prevent financial crime.
MiCA: The EU Markets in Crypto-Assets Regulation — a comprehensive framework governing crypto-asset issuers and service providers across the European Union.
Offering memorandum / Prospectus: The legal document that sets out a fund's terms, strategy, risks, fees and governance, on the basis of which eligible investors may subscribe.
Offering supplement: A document that supplements the umbrella prospectus with the specific terms of an individual sub-fund.
Principal Adverse Impacts (PAI): Under SFDR, the material negative effects of investment decisions on sustainability factors; managers must disclose whether and how they consider them.
Professional / qualified investor: An investor that meets defined regulatory criteria (experience, size or expertise) and may access products not available to retail investors, with fewer protections presumed necessary.
Reverse solicitation: The principle that an investor approaches a manager on their own initiative, rather than being marketed to — the basis on which certain restricted materials are made available.
SFDR: The EU Sustainable Finance Disclosure Regulation, which sets out how managers disclose the sustainability characteristics and risks of their products.

Investment strategies

Alpha: The portion of return attributable to skill or a specific edge, over and above what broad market exposure (beta) would deliver.
Arbitrage: Seeking to profit from a price difference for the same or related assets across venues, instruments or time, ideally with limited directional risk.
Basis trade: A trade that captures the basis — the price gap between a spot asset and its future or derivative — for example buying spot and selling a future to earn the spread as they converge.
Beta: The portion of return and risk that comes from exposure to the overall market's movements.
Carry: The return earned (or paid) simply for holding a position over time, such as a funding or yield differential, independent of price movement.
Directional strategy: A strategy whose returns depend on the market moving in a particular direction (up or down), in contrast to market-neutral or relative-value approaches.
Discretionary: An approach in which investment decisions are made by human judgement, interpreting information and context rather than following fixed rules.
Long/short: A strategy that holds long positions in assets expected to rise and short positions in assets expected to fall, often to isolate relative value and reduce directional exposure.
Market neutral: A strategy that seeks returns from relative performance while hedging out broad market direction, aiming to reduce dependence on whether the market rises or falls. Not risk-free.
Quantitative: Investment research and decision-making driven by mathematical models, data and statistical analysis.
Relative value: An approach that profits from the price relationship between two related instruments rather than the direction of either one.
Systematic: An approach in which decisions are generated by defined, repeatable rules or models rather than case-by-case human judgement.

Market mechanics

Basis: The difference between the spot price of an asset and the price of its future or derivative; it narrows toward zero as the contract approaches settlement.
CFD (Contract for Difference): A leveraged derivative that pays the difference in an asset's price between opening and closing a position, without ownership of the underlying asset.
Derivative: A financial contract whose value derives from an underlying asset, such as a future, option, swap or contract for difference.
Funding rate: The periodic payment exchanged between holders of long and short perpetual-future positions that keeps the contract price anchored to the spot price; it can be positive or negative.
Futures: Standardised contracts to buy or sell an asset at a set price on a future date, used for hedging or gaining exposure without holding the underlying.
Leverage: The use of borrowing or derivatives to gain exposure larger than the capital committed, amplifying both gains and losses.
Liquidation: The forced closure of a leveraged position when its collateral is no longer sufficient to cover potential losses.
Long / short position: A long position profits when the asset's price rises; a short position profits when it falls. Together they let a strategy express both directions.
Margin: The collateral posted to open and maintain a leveraged position; if losses erode it below a required level, more may be demanded or the position closed.
Perpetual future (perp): A futures contract with no expiry date, common in digital-asset markets, kept aligned to the spot price by a periodic funding payment between longs and shorts.
Slippage: The difference between the expected price of a trade and the price at which it is actually executed, typically due to limited liquidity or fast-moving markets.
Spot: The purchase or sale of an asset for immediate delivery at the current market price, as opposed to a future or derivative contract.
Spread: The difference between two prices — for example the gap between the best buy and sell price for an asset, or between two related instruments.

Custody & operations

Cold storage / hot wallet: Cold storage keeps private keys offline for maximum security; a hot wallet is connected to the internet for faster access but greater exposure.
Counterparty risk: The risk that the other party to a transaction — an exchange, broker or custodian — fails to meet its obligations.
MPC (Multi-Party Computation): A cryptographic technique that splits control of a key across multiple parties so it is never assembled in one place, used in institutional custody.
Multi-signature (multi-sig): A security arrangement requiring several independent keys to approve a transaction, so no single party can move assets alone.
On-chain / off-chain: On-chain activity is recorded directly on a blockchain; off-chain activity happens away from it, for example within an exchange's internal ledger.
Prime broker: An intermediary that provides trading, financing, custody and settlement services to institutional managers across multiple venues.
Private key: The secret cryptographic key that controls a digital-asset wallet; whoever holds it controls the assets, which is why key management is critical.
Qualified custody: The safekeeping of assets by a regulated, institutional-grade custodian meeting defined standards — a key control for holding digital assets securely.
Settlement: The final transfer of an asset and its payment between parties, completing a transaction.

Performance & risk

AUM (Assets under management): The total market value of the assets a manager or fund manages on behalf of investors.
Correlation: The degree to which two assets move together; low or negative correlation between holdings is the basis of diversification.
Drawdown: The decline in value from a peak to a subsequent trough, a common measure of downside risk.
High-water mark: The highest NAV a fund has previously reached, above which performance fees typically apply again — ensuring fees are only charged on new gains.
Liquidity: How easily an asset or position can be bought or sold without materially moving its price; it can vary sharply across instruments and market conditions.
NAV (Net Asset Value): The per-unit value of a fund, calculated as its total assets minus liabilities divided by the number of units; the basis for subscriptions, redemptions and performance.
Sharpe ratio: A measure of risk-adjusted return, comparing return in excess of a risk-free rate to the volatility taken to achieve it.
Since inception: The performance of a fund or strategy measured from its launch date to the present.
Subscription / redemption: Subscription is the purchase of fund units by an investor; redemption is the sale of units back to the fund. Their frequency is set by the fund's dealing terms.
Volatility: A measure of how much an asset's price fluctuates over time; higher volatility means larger and more frequent price swings.

Digital-asset fundamentals

Bitcoin (BTC): The first and largest cryptocurrency by market value, operating on its own decentralised blockchain.
Blockchain: A distributed, tamper-resistant digital ledger that records transactions across many computers, underpinning most digital assets.
DeFi (Decentralised Finance): Financial services — such as trading, lending and borrowing — built on public blockchains using smart contracts, without traditional intermediaries.
Digital asset: A broad term for assets that exist in digital form and are recorded on a blockchain or similar system, including cryptocurrencies and tokens.
Ethereum (ETH): A major blockchain platform whose native asset is ether, widely used for smart contracts and decentralised applications.
Smart contract: Self-executing code on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met.
Stablecoin: A digital token designed to hold a stable value, typically by referencing a fiat currency such as the US dollar.
Token: A digital unit of value or rights issued on a blockchain; tokens can represent currencies, assets, access rights or governance votes.
Tokenisation: The process of representing an asset — financial or real-world — as a digital token on a blockchain.
Wallet: Software or hardware that stores the keys used to hold and transact digital assets; it controls access rather than physically holding the assets.

This glossary is provided for general information and educational purposes only, for professional and qualified investors. Definitions are simplified and do not constitute legal, tax or investment advice, nor an offer or solicitation. Terms may have specific legal meanings in a given jurisdiction or document.