Crypto Institutions Shift Focus Beyond Audits as Trust Signals Falter
Vexoda Newsroom
Institutional investors are moving towards continuous monitoring and operational resilience after traditional trust signals failed to predict crypto project risks. This shift could impact investment s
In the latest development in the cryptocurrency space, institutional due diligence is shifting away from relying solely on smart contract audits as trust indicators fail to accurately predict risk. According to a report by Hacken, only 9% of tracked projects had third-party monitoring, while just 4% combined it with active bug bounties and security audits.
The shift in focus is driven by the fact that compromised keys, signers, and infrastructure accounted for 88.3% of the roughly $764 million stolen during Q2 2026, highlighting the limitations of traditional audit methods. Abraxas Capital's Federico Bagiotti noted that 'inadequate security relative to capital at risk' often led his firm to reject promising positions.
Institutional investors are now looking for ongoing evidence of operational security as a key factor in their decision-making process, potentially leading to higher perceived risks and reduced investment. Moody’s Ratings’ Rajeev Bamra emphasized that 'operational resilience has become the practical lens' through which institutions evaluate security, compliance, and governance.
The shift is also evident in regulatory scrutiny. BitGo's Jody Mettler reported that institutional clients are asking more detailed questions about custody providers' access controls, incident response, and business continuity as European regulators examine operational resilience under DORA (Digital Operational Resilience Act).
Hacken’s report further revealed that 14 projects exploited in Q2 had previously been audited. However, most losses stemmed from areas outside the scope of conventional smart contract reviews, such as signer devices, bridge validators, backend infrastructure, admin keys, and deprecated contracts.
This change in approach is likely to impact investment strategies and market dynamics, with a greater emphasis on ongoing security measures over initial audits. Traders should monitor how these shifts influence investor sentiment and regulatory frameworks moving forward.
For traders, it’s crucial to stay informed about the evolving standards for institutional due diligence and understand that continuous monitoring and operational resilience will become key factors in evaluating crypto projects.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.