Written by: Mankun Blockchain Legal Services
As early as the end of 2023, 'AI+' was one of the keywords in the mainstream track predictions of major investment research institutions regarding Web3. Now, a year has passed, what has happened with 'AI'?
Recently, a16z and VanEck released their 2025 Web3 predictions, both reports pointed out 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 soared to 80 million dollars for Ai16z and its backing DAOS.FUN, igniting a new trend in AI investment: 'AI Crypto Fund'.
This has sparked Mankun Lawyer's curiosity, as he has long advised crypto investors to participate through crypto funds. Can the emergence of AI crypto funds bring smarter investment paths for crypto investors?
In this article, Lawyer Mankun explores the new investment trend of AI crypto funds.
What is an AI Crypto Fund?
AI crypto funds, as the name suggests, the core logic is to replace traditional manual management with new investment decision-making methods using artificial intelligence (AI), enabling full-process automated operations on-chain, from data analysis to decision execution, without human intervention. Unlike traditional crypto funds that rely on fund managers' experience and intuition, AI crypto funds depend on algorithm models and on-chain data, implementing efficient and precise investment strategies through real-time computation and execution.
The realization of AI crypto funds is attributed to the high transparency and democracy of Web3:
Firstly, blockchain as infrastructure provides AI machine learning models with rich and real-time data, extracting patterns from on-chain transaction history, asset price fluctuations, and market sentiment, which can help AI optimize investment strategies.
Secondly, the decentralized autonomous organization (DAO) structure provides an unlicensed operating environment for AI crypto funds. The operation of AI crypto funds can achieve democratic governance and execution through smart contracts, further reducing the subjectivity, operational risks, and centralization issues caused by human intervention.
Due to the characteristics of underlying infrastructure, the advantages of AI crypto funds are more pronounced compared to traditional crypto funds:
Data Processing Capability. AI can quickly analyze massive amounts of on-chain and off-chain data, accurately identifying trends and making decisions. This processing speed and data scale far exceed human limits.
Market Sentiment Capture. By analyzing social media, news, and industry trends, AI can sense signals of market changes in advance, helping the fund make more accurate choices before trends occur.
Autonomy and Transparency. Relying on DAO and smart contracts, all operational records are on-chain, and AI can promote transparency in fund investment and management, increasing trust.
Risk Management Capability. AI can not only monitor in real-time but also quickly adjust asset allocation according to market changes, giving AI crypto funds an advantage in facing market volatility.
As more capital participates in Web3, investors' demands for efficient, robust, and transparent investments have driven the birth of AI crypto funds. The concept is good, but implementation is key. So, what are the representative projects in this field?
What are the AI Crypto Funds?
Currently, the exploration in the field of AI crypto funds has already achieved significant results. In addition to DAOS.FUN mentioned at the beginning by Mankun Lawyer, there are also some AI crypto funds that have already begun testing/running.
1. Ai16z and DAOS.FUN
As a phenomenon-level AI crypto fund, Ai16z attracted the attention of the entire industry as soon as it was launched in the second half of 2024, successfully creating a new trend in AI crypto investment. The decentralized autonomous organization (DAO) behind Ai16z—DAOS.FUN—is the core technical supporter of the fund, achieving governance transparency and decision automation through smart contracts. Ai16z relies on advanced AI algorithms and on-chain data analysis capabilities to truly achieve full-process automation from strategy formulation to execution.
2. Yahctzee Fund
Supported by crypto notable figure Arthur Hayes, Yahctzee Fund is another noteworthy autonomous AI-driven fund. It demonstrates exceptional flexibility and adaptability in investment decision-making through on-chain governance structures and high-performance AI algorithms. The goal of Yahctzee Fund is not only to optimize returns but also to explore optimal paths for long-term asset allocation, attempting 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 influence of this project is not significant, its focus on investment management in small Web3 communities not only makes its differentiated advantages obvious 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 the next generation of AI agent infrastructure, its flagship project BigTonyXBT is an autonomous trader based on the Base chain. BigTonyXBT focuses on the DeFi sector, gradually building 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 mode innovation of crypto funds. However, while AI crypto funds showcase their immense potential, whether they can achieve compliance in the increasingly clear global regulatory environment is also a key issue—compliance or not determines whether they can truly inject sustainable growth momentum into the Web3 ecosystem.
Exploration of AI Crypto Fund Compliance
The emergence of AI crypto funds undoubtedly brings innovation to the crypto investment field, but whether this emerging model is compliant remains an unresolved issue. This mainly stems from the particularity of AI crypto funds:
Firstly, there is the issue of legal entities. Traditional funds must obtain approval from the judicial jurisdiction during establishment and possess a clear legal identity. However, most of the AI crypto funds seen currently often operate based on DAOs, which have not been clearly recognized as legal entities in most countries. This means that if AI crypto funds involve asset custody, contract signing, or legal disputes, the existing legal framework may not provide effective support. In some jurisdictions, unlicensed fund operations may be regarded as illegal fundraising, which poses greater legal risks for AI crypto funds in cross-border operations.
Secondly, there 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 the definition of 'fund manager' itself a compliance challenge. Moreover, this 'unlicensed operation' model may be seen as evading regulation, especially in regions with strict regulations on fund establishment and management, such as the US and Europe, which will become a major obstacle to the compliance of AI crypto funds.
The third issue is governance transparency and algorithm compliance. Although the DAO structure provides technical support for on-chain transparent governance for AI crypto funds, this transparency is more aimed at technology and community rather than regulatory authorities. Traditional funds need to disclose their investment strategies and governance structures to regulatory authorities, but the algorithms of AI crypto funds are complex and difficult to interpret, leaving doubts about whether regulatory authorities can accept such 'black box' operating methods. Especially in regions like Europe with explicit requirements for algorithm transparency and interpretability, AI crypto funds may face greater compliance pressure.
In addition, AI crypto funds typically serve global markets, but the regulatory attitudes towards crypto assets and AI technologies vary by country. For example, the US Securities and Exchange Commission may view it as unregistered securities, while in China, all cryptocurrency activities are explicitly prohibited, making it impossible for AI crypto funds to operate due to policy constraints. This inconsistency in regional regulation poses more compliance challenges for AI crypto funds when expanding business.
Moreover, whenever it comes to AI, 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, such as China's Ministry of Industry and Information Technology deciding to establish an Artificial Intelligence Standardization Technical Committee to revise industry standards; Europe's EU AI Act is gradually progressing, aiming to classify AI applications by risk level and establish strict transparency and data usage requirements; and the US White House has released the Blueprint for an AI Bill of Rights, which, although a principled guide, also clearly proposes basic principles of algorithm transparency, user privacy protection, and prevention of data misuse. The gradual establishment of these regulatory rules will also impose stricter requirements for the compliance of AI crypto funds.
Mankun Lawyer's Summary
The emergence of AI crypto funds brings a new imaginative space to the crypto investment field. Mankun Lawyer believes that AI crypto funds are not only a technological innovation but also a challenge to traditional financial logic. However, whether it's the legal status of DAO, 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 obvious gaps between traditional regulatory frameworks and new technologies, developers and investors should also strive to: actively adapt to existing legal frameworks and prepare for future regulatory rules amidst uncertainties.
Mankun Lawyer believes that only by seeking innovation within compliance and creating value within rules can AI crypto funds inject sustainable development momentum into the entire industry.