AI Crypto Funds are not only a technological innovation but also a challenge to traditional financial logic.
Written by: Mankun Blockchain Legal Services
As early as the end of 2023, the mainstream Web3 research predictions from major investment research institutions highlighted "AI+" as one of the key terms. Now, a year has passed, how is "AI" doing?
Recently, a16z and VanEck released their 2025 Web3 predictions, both reports pointed to the same topic: AI agents, the latest development direction of AI+. Among them, AI agent investment stands out, achieving remarkable results in the second half of 2024—within a day of its launch, the market value of Ai16z and its backing DAOS.FUN reached 80 million USD, sparking a new trend in AI investment: "AI Crypto Funds."
This has piqued the curiosity of Mankun lawyers, as they have long advised crypto investors to participate through crypto funds. Can the emergence of AI Crypto Funds provide crypto investors with a smarter investment path?
In this article, Mankun lawyers explore this topic, delving into the new investment trend of AI Crypto Funds.
What is an AI Crypto Fund?
An AI Crypto Fund, as the name suggests, is fundamentally about using artificial intelligence (AI) to replace traditional human management in investment decision-making. It can achieve full-process automation on-chain, from data analysis to decision execution, without human intervention. Unlike traditional crypto funds that rely on the experience and intuition of fund managers, AI Crypto Funds leverage algorithmic models and on-chain data to implement efficient and precise investment strategies through real-time computation and execution.
The realization of AI Crypto Funds is attributed to the high transparency and democratization of Web3:
First, blockchain serves as the infrastructure, providing AI machine learning models with rich and real-time data. By extracting patterns from on-chain transaction history, asset price fluctuations, and market sentiment, this data helps AI optimize investment strategies.
Second, the decentralized autonomous organization (DAO) structure provides an unpermissioned operating environment for AI Crypto Funds. The operation of AI Crypto Funds can achieve democratic governance and execution through smart contracts, further reducing subjectivity, operational risks, and centralization issues caused by human intervention.
Due to the characteristics of the underlying infrastructure, the advantages of AI Crypto Funds are more pronounced compared to traditional crypto funds:
Data processing capability. AI can rapidly analyze vast amounts of on-chain and off-chain data, accurately identify trends, and make decisions. This processing speed and data scale far exceed human limits.
Market sentiment capture. By analyzing social media, news, and industry dynamics, AI can sense signals of market changes in advance, helping funds make more accurate choices before trends occur.
Autonomy and transparency. Relying on DAO and smart contracts, all operational records are on-chain, allowing AI to promote transparency in fund investment and management, increasing trust.
Risk management capability. AI can not only conduct real-time monitoring but also quickly adjust asset allocation based on market changes, giving AI Crypto Funds an advantage in the face of market volatility.
As more capital enters Web3, the demand for efficient, robust, and transparent investment options has driven the emergence of AI Crypto Funds. The concept is promising, but implementation is key. So, what are the representative projects in this field?
What are the AI Crypto Funds?
Currently, the exploration of AI Crypto Funds has already yielded significant results. In addition to DAOS.FUN mentioned at the beginning by Mankun lawyers, there are several other AI Crypto Funds that have begun experimenting or operating.
1. Ai16z and DAOS.FUN
As a phenomenal AI Crypto Fund, Ai16z attracted the attention of the entire industry upon its launch in the second half of 2024, successfully igniting the trend of AI crypto investment. The decentralized autonomous organization (DAO) behind Ai16z—DAOS.FUN—serves as the core technical supporter of the fund, achieving transparent governance and automated decision-making through smart contracts. Ai16z relies on advanced AI algorithms and on-chain data analysis capabilities to truly realize full-process automation from strategy formulation to execution.
2. Yahctzee Fund
Supported by crypto figure Arthur Hayes, the Yahctzee Fund is another notable autonomous AI-driven fund. It demonstrates excellent flexibility and adaptability in investment decision-making through its on-chain governance structure and high-performance AI algorithms. The goal of the Yahctzee Fund is not only to optimize returns but also to explore optimization paths for long-term asset allocation, aiming to create a more sustainable investment model.
3. Sekoia Virtuals
Sekoia Virtuals is an experimental AI fund initiated by Anand Iyer, managing partner of Canonical Ventures, focusing on supporting the Virtuals ecosystem. Although the current market impact of this project is not significant, its emphasis on investment management for small Web3 communities not only highlights its differentiated advantages but also broadens the vertical fields and directions for the development of AI Crypto Funds.
4. Cod3x and BigTonyXBT
Cod3x is an organization focused on building next-generation AI agent infrastructure, and its flagship project BigTonyXBT is an autonomous trader based on the Base chain. BigTonyXBT focuses on the DeFi sector, gradually establishing a complete ecosystem for AI Crypto Funds in financial investment through AI automated trading and asset management functions.
These projects, from technical implementation to ecological layout, each have their focus, comprehensively promoting the innovative model of crypto funds. However, while AI Crypto Funds showcase their immense potential, whether they can achieve compliance in the gradually clarifying global regulatory environment is also a key issue—compliance will determine whether they can truly inject sustainable growth momentum into the Web3 ecosystem.
Compliance Exploration of AI Crypto Funds
The emergence of AI Crypto Funds undoubtedly brings innovation to the crypto investment field, but whether this new model is compliant remains an unresolved question. This mainly stems from the uniqueness of AI Crypto Funds:
First is the issue of legal entities. Traditional funds must undergo approval from judicial jurisdictions when established and possess a clear legal identity. However, most AI Crypto Funds currently observed often operate based on DAOs, which have not been explicitly recognized as legal entities in most countries. This means that if an AI Crypto Fund involves asset custody, contract signing, or legal disputes, the existing legal framework may not provide effective support. In some jurisdictions, operating a fund without a license may be considered illegal fundraising, which poses greater legal risks for AI Crypto Funds in cross-border operations.
Second is the issue of licenses and regulation. Existing financial market rules require fund managers to obtain relevant licenses and fulfill regulatory obligations, such as disclosing risks to investors and regularly reporting fund performance. However, AI Crypto Funds do not have a clear manager; investment strategies and execution are completed by AI algorithms, making it a compliance challenge to define the identity of a "fund manager." Additionally, this "unlicensed operation" model may be seen as evading regulation, especially in regions with strict regulations on fund establishment and management, such as the United States and Europe, which will become a significant obstacle to the compliance of AI Crypto Funds.
Third is the issue of governance transparency and algorithm compliance. Although the DAO structure provides technical support for on-chain transparent governance of AI Crypto Funds, this transparency is more directed towards technology and the community rather than regulatory agencies. Traditional funds are required to disclose their investment strategies and governance structures to regulatory agencies, but the algorithms of AI Crypto Funds are complex and difficult to explain. Whether regulatory agencies can accept such "black box" operations remains in question. Particularly in regions like Europe, where there are explicit requirements for algorithm transparency and interpretability, AI Crypto Funds may face greater compliance pressure.
Moreover, AI Crypto Funds typically serve global markets, but countries have inconsistent regulatory attitudes towards crypto assets and AI technology. For example, the U.S. Securities and Exchange Commission may view them as unregistered securities, while in China, all activities involving cryptocurrencies are explicitly prohibited, potentially preventing AI Crypto Funds from conducting business due to policy violations. This inconsistency in regional regulation poses more compliance challenges for AI Crypto Funds as they expand their operations.
Additionally, whenever AI is discussed, data privacy and cross-border issues are always unavoidable core regulatory topics. Currently, many countries and regions around the world have begun to establish AI-related regulatory legislation. For instance, the Ministry of Industry and Information Technology of China has decided to establish a standardization technical committee for artificial intelligence, responsible for revising industry standards; the European Union's AI Act is gradually advancing, aiming to classify AI applications by risk level and establish strict requirements for transparency and data usage; the U.S. White House has released a Blueprint for an AI Bill of Rights, which, although a principled guideline, also clearly states basic principles for algorithm transparency, user privacy protection, and prevention of data abuse. The gradual establishment of these regulatory rules will impose stricter requirements for the compliance of AI Crypto Funds.
Summary by Mankun Lawyers
The emergence of AI Crypto Funds has brought a new imaginative space to the crypto investment field. Mankun lawyers believe that AI Crypto Funds are not only a technological innovation but also a challenge to traditional financial logic. However, whether it is the legal status of DAOs, the interpretability of AI algorithms, or the diversity of the global regulatory environment, compliance remains the key factor determining whether AI Crypto Funds can go mainstream.
Although there are still significant gaps between traditional regulatory frameworks and new technologies, developers and investors should actively adapt to existing legal frameworks while preparing for future regulatory rules amid uncertainty.
Mankun lawyers believe that only by seeking innovation within compliance and creating value within rules can AI Crypto Funds inject sustainable development momentum into the entire industry.
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