I’ve built these frameworks for firms in exactly this position, and the pattern never changes: teams estimate implementation time and miss it by a factor of two or three. They plan for nine months; it takes eighteen. The rules are rarely the hard part. Retrofitting controls into systems built without them is.
The firms winning right now started early. The ones that waited until enforcement hit spent the next two years writing settlement checks and rebuilding trust.
Here’s my question: if you launched a governance framework today, how long would it take your firm to run it effectively? Double that number. Maybe triple it. Then work backward to when you should start. The regulators have shown their hand. Europe built the model. America is building the same thing. The only variable is whether you’re ready first, or scrambling to catch up.
– Maria Golenkov, partner and head of digital assets, governance, risk & controls, DLA LLC
Ask an Expert
Q. What internal controls framework should advisors demand before allocating to digital assets?
The first thing advisors should understand is that operational risk in digital assets is not a secondary consideration. It is part of the investment risk. In traditional markets, investors can often rely on a mature network of custodians, administrators, prime brokers, auditors and standardized reporting systems. In digital assets, those protections are less consistent, and the manager’s internal control environment carries much more weight. Before discussing returns, advisors should understand who controls the assets, who can move them, how transactions are approved and how positions are independently reconciled.
