Institutional Adoption Archives

11th June 2025

U.S. Strategic Bitcoin Reserve Marks Milestone in Institutional Adoption: Gemini

*** NOT FOR PUBLICATION – EMBARGOED TILL 12PM ET JUNE 11 ***

The formation of a U.S. Strategic Bitcoin Reserve (SBR) marks a pivotal step in bitcoin’s BTC evolution as an institutional asset, crypto exchange Gemini said in a Thursday report co-authored with data firm Glassnode.

With over 30% of circulating supply now held by centralized entities including exchanges, exchange-traded funds (ETFs), companies and sovereigns, bitcoin is undergoing a structural shift driven by long-term capital and strategic custody, the report said.

Each sovereign dollar invested in bitcoin carries an outsized impact, the report said, with $1 of SBR capital potentially generating $25 in market cap expansion and $1.70 in lasting value. This shows the “reflexive power of institutional inflows.”

U.S. President Donald Trump directed his administration in March to establish a Bitcoin Strategic Reserve to hold the assets that have been seized by the government. He also called for a stockpile of other types of digital assets.

Though seeded with seized assets, the SBR validates the largest cryptocurrency's place in modern reserve strategy, one increasingly reflected in how institutions value and integrate the asset into global finance, the note said.

While early holders still dominate ownership, sovereign endorsement is accelerating institutional confidence, according to Gemini.

Liquid supply remains stable as assets migrate from exchanges to custodians, signaling consolidation rather than contraction, the report noted.

Bitcoin volatility has declined, which is good for adoption. Recent cycles have been “defined by more consistent, sustained rallies that appeal to long-term investors,” the report added.

10th June 2025

Blockchain Initiatives Have Been Adopted by 60% of Fortune 500 Companies: Coinbase Survey

The future of money has arrived, with 60% of Fortune 500 companies actively working on blockchain initiatives, digital asset exchange Coinbase (COIN) said in its second quarter State of Crypto report published Tuesday.

Stablecoin usage is exploding with a 54% growth in supply year-on-year, more than one third of small and medium sized businesses (SMB) are using crypto, and 60% of Fortune 500 companies are working on blockchain projects, the report said.

Adoption is expected to continue to grow. Twenty percent of Fortune 500 executives said that onchain initiatives were a key part of their company's strategy moving forward, and more than 80% of institutional investors plan to increase their exposure to crypto this year.

Forty-six percent of small and medium businesses who don't use crypto are planning to start using it in the next three years, the report said, and 82% of these companies were of the view that usage of this technology could help address some of their “financial pain points.”

Still, for crypto to reach its full potential, greater regulatory clarity is needed. 90% of F500 execs surveyed said that clear crypto regulation in the U.S. is needed to support innovation.

Coinbase used third-party research firms to survey 100 Fortune 500 executives about their adoption of Web3, and 251 decision-makers at small and medium-sized businesses in April. It also analysed web3 initiative activity by Fortune 100 companies between 2020 and 2025.

4th June 2025

The Convergence of TradFi and Digital Asset Markets – A Maturing Ecosystem

The line between traditional and crypto markets is actively being redrawn. As digital asset markets mature, the convergence of traditional finance (TradFi) and digital markets is accelerating, resulting in a more mature, institutional-grade ecosystem shaped by the frameworks, expectations and operational resilience that have historically characterized TradFi.

Recent developments underscore a paradigm shift in how digital assets are perceived by institutions. The U.S. government’s announcement of a strategic digital asset reserve, consisting of bitcoin, ether, XRP, solana and cardano, signals strong institutional validation. In parallel, more than eleven U.S. states have shown interest in or are actively working on bitcoin treasury bills. Sovereign investors such as the Abu Dhabi Investment Authority (ADIA) have disclosed significant positions, with a $436.9 million stake in BlackRock’s iShares Bitcoin ETF (IBIT) as of December 31, 2024.

These aren’t speculative moves, but rather concerted investments to stay at the forefront of an evolving financial system. Support from these governments is reinforcing institutional engagement, marking a turning point where the risk of missing out outweighs the risk of exposure to the digital assets ecosystem.

The evolution of digital asset market infrastructure

Previously, institutional participation in digital assets was constrained by high volatility, regulatory uncertainty and fragmented infrastructure. Now, regulated custodians offer institutional-grade solutions, while trading platforms provide improved access and reliable execution. The expansion of risk management tools — including hedging, credit facilities and market surveillance — has enhanced the operational stability for a space once known for volatility.

These developments have lowered barriers to entry, enabling traditional institutions to approach digital assets with familiar risk and compliance frameworks.

Financial products driving convergence

Institutional adoption is further fueled by products that mirror traditional markets while leveraging blockchain advantages. Today’s institutional offerings include spot & derivatives markets, yield-bearing products, ETFs & in-kind redemptions and depositary receipts — all designed with similar underwriting logic and performance expectations.

The expansion of futures, options and structured products in crypto mirrors the mechanics of TradFi derivatives. These instruments provide price discovery, risk hedging and speculative capabilities that align with institutional mandates. Yield-bearing products like staking, crypto lending and tokenized fixed-income are being designed with yield profiles resembling TradFi. These structures provide fixed or floating returns while incorporating risk metrics familiar to institutions.

One of the most popular products has been spot bitcoin ETPs. Nasdaq’s proposed in-kind redemptions for BlackRock’s Bitcoin ETF further align crypto ETFs with traditional counterparts, boosting efficiency and liquidity. Additionally, crypto depositary receipts enable institutions to access digital assets without direct custody, bridging traditional markets and crypto in a regulated, familiar structure.

Institutional investors are engaging through structures that blend traditional and digital techniques: hybrid funds, separately managed accounts (SMAs) and bespoke mandates. These tailor exposure while maintaining operational familiarity, providing institutions with regulated pathways to participate in this evolving ecosystem.

Institutional comfort and adoption trends

Regulatory clarity remains critical. Recent SEC moves and a more crypto-forward administration signal openness to clearer frameworks, encouraging increased institutional engagement. Some traditional players are still taking a wait-and-see approach, cautiously observing market infrastructure and regulatory signals before committing capital at scale.

On the other hand, firms like BlackRock, Fidelity and Citadel are entering the DeFi space. Institutional adoption is unlocking portfolio diversification, enhanced market efficiency and a more structured approach to risk management, all pointing to a more robust financial ecosystem.

Conclusion

The institutionalization of digital assets and its convergence with traditional financial systems is not a passing trend, but a structural realignment of markets. Forward-looking institutions are not just participating, they’re supporting the emerging ecosystem.

For CIOs and allocators, this convergence presents an inflection point. The ability to navigate digital assets with TradFi discipline and DeFi innovation is becoming a key differentiator — placing emphasis on the importance of partnering with firms who have deep experience across both markets. As the financial landscape evolves, institutions that stay informed and insightful will find themselves positioned to adapt and thrive.

29th May 2025

Crypto for Advisors: Crypto Universe

In today’s Crypto for Advisors, Fabian Dori, Chief Investment Officer at Sygnum Bank, explores why crypto is more than just an asset class and looks at the institutional adoption of decentralized finance.

Then, Abhishek Pingle, co-founder of Theo, answers questions about how risk-adverse investors can approach decentralized finance and what to look for in Ask an Expert.

– Sarah Morton

Crypto Is Not an Asset Class — It's an Asset Universe

Moody's recently warned that public blockchains pose a risk to institutional investors. At the same time, U.S. bitcoin ETFs are drawing billions in inflows. We’re seeing the start of a long-awaited shift in institutional adoption. But crypto's real potential lies far beyond passive bitcoin exposure. It's not just an asset class — it's an asset universe, spanning yield-generating strategies, directional plays, and hedge fund-style alpha. Most institutions are only scratching the surface of what's possible.

Institutional investors may enhance their risk-return profile by moving beyond a monolithic view of crypto and recognizing three distinct segments: yield-generating strategies, directional investments, and alternative strategies.

Like traditional fixed income, yield-generating strategies offer limited market risk with low volatility. Typical strategies range from tokenized money market funds that earn traditional yields to approaches engaging with the decentralized crypto finance ecosystem, which deliver attractive returns without traditional duration or credit risk.

BTC / ETH comparison chart

These crypto yield strategies may boast attractive Sharpe ratios, rivalling high-yield bonds' risk premia but with different mechanics. For example, returns can be earned from protocol participation, lending and borrowing activities, funding rate arbitrage strategies, and liquidity provisioning. Unlike bonds that face principal erosion in rising rate environments, many crypto yield strategies function largely independently of central bank policy and provide genuine portfolio diversification precisely when it's most needed. However, there is no such thing as a free lunch. Crypto yield strategies entail risks, mainly centered around the maturity and security of the protocols and platforms a strategy engages with.

The path to institutional adoption typically follows three distinct approaches aligned with different investor profiles:

Risk-averse institutions begin with yield-generating strategies that limit direct market exposure while capturing attractive returns. These entry points enable traditional investors to benefit from the unique yields available in the crypto ecosystem without incurring the volatility associated with directional exposure.
Mainstream institutions often adopt a bitcoin-first approach before gradually diversifying into other assets. Starting with bitcoin provides a familiar narrative and established regulatory clarity before expanding into more complex strategies and assets.
Sophisticated players like family offices and specialized asset managers explore the entire crypto ecosystem from the outset and build comprehensive strategies that leverage the full range of opportunities across the risk spectrum.

Contrary to early industry predictions, tokenization is progressing from liquid assets like stablecoins and money market funds upward, driven by liquidity and familiarity, not promises of democratizing illiquid assets. More complex assets are following suit, revealing a pragmatic adoption curve.

Stablecoins vs other assets chart

Moody's caution about protocol risk exceeding traditional counterparty risk deserves scrutiny. This narrative may deter institutions from crypto's yield layer, yet it highlights only one side of the coin. While blockchain-based assets introduce technical risks, these risks are often transparent and auditable, unlike the potentially opaque risk profiles of counterparties in traditional finance.

Smart contracts, for example, offer new levels of transparency. Their code can be audited, stress-tested, and verified independently. This means risk assessment can be conducted with fewer assumptions and greater precision than financial institutions with off-balance-sheet exposures. Major decentralized finance platforms now undergo multiple independent audits and maintain significant insurance reserves. They have, at least partially, mitigated risks in the public blockchain environment that Moody's warned against.

While tokenization doesn't eliminate the inherent counterparty risk associated with the underlying assets, blockchain technology provides a more efficient and resilient infrastructure for accessing them.

Ultimately, institutional investors should apply traditional investment principles to these novel asset classes while acknowledging the vast array of opportunities within digital assets. The question isn't whether to allocate to crypto but rather which specific segments of the crypto asset universe align with particular portfolio objectives and risk tolerances. Institutional investors are well-positioned to develop tailored allocation strategies that leverage the unique characteristics of different segments of the crypto ecosystem.

– Fabian Dori, chief investment officer, Sygnum Bank

Ask an Expert

Q: What yield-generating strategies are institutions using on-chain today?

A: The most promising strategies are delta-neutral, meaning they are neutral to price movements. This includes arbitrage between centralized and decentralized exchanges, capturing funding rates, and short-term lending across fragmented liquidity pools. These generate net yields of 7–15% without wider market exposure.

Q: What structural features of DeFi enable more efficient capital deployment compared to traditional finance?

A: We like to think of decentralized finance (DeFi) as “on-chain markets”. On-chain markets unlock capital efficiency by removing intermediaries, enabling programmable strategies, and offering real-time access to on-chain data. Unlike traditional finance, where capital often sits idle due to batch processing, counterparty delays, or opaque systems, on-chain markets provide a world where liquidity can be routed dynamically across protocols based on quantifiable risk and return metrics. Features like composability and permissionless access enable assets to be deployed, rebalanced, or withdrawn in real-time, often with automated safeguards. This architecture supports strategies that are both agile and transparent, particularly important for institutions that optimize across fragmented liquidity pools or manage volatility exposure.

Q: How should a risk-averse institution approach yield on-chain?

A: Many institutions exploring DeFi take a cautious first step by evaluating stablecoin-based, non-directional strategies, as explained above, that aim to offer consistent yields with limited market exposure. These approaches are often framed around capital preservation and transparency, with infrastructure that supports on-chain risk monitoring, customizable guardrails, and secure custody. For firms seeking yield diversification without the duration risk of traditional fixed income, these strategies are gaining traction as a conservative entry point into on-chain markets.

– Abhishek Pingle, co-founder, Theo

Keep Reading

Bitcoin reached a new all-time high of $111,878 last week.
Texas Strategic Bitcoin Reserve Bill passed the legislature and advances to the governor's desk for signature.
U.S. Whitehouse Crypto Czar David Sacks said regulation is coming in the crypto space in August.

21st May 2025

Crypto’s Market Penetration Tipping Point

The digital assets market has transformed from a niche experiment into a global force reshaping finance, commerce, and technology. In May 2025, the global crypto market is valued at $3.05 trillion, growing at a pace on par with the internet boom in the 90s.

A look at the growth curve

Historical adoption curves for technologies like the internet and smartphones demonstrate that 10% penetration often marks a tipping point, after which growth accelerates exponentially due to network effects and mainstream acceptance. Digital assets are now on this trajectory, driven by rising user adoption, institutional investment and innovative use cases. After years of public uncertainty, a pivotal milestone may be achieved this year: cryptocurrency user penetration can surpass the critical 10% threshold, estimated to reach 11.02% globally in 2025 by Statista, up from 7.41% in 2024.

The chart below compares the early user adoption curves of cryptocurrency and the internet. It highlights that crypto is growing at a significantly faster rate than the internet did in its early years.

Internet vs crypto users comparison: Chart

The 10% threshold: a catalyst for exponential growth

With crypto expected to cross the 10% threshold of adoption in 2025, it is important to note that the 10% mark is not arbitrary —- it’s a well-documented tipping point in technology diffusion, rooted in Everett Rogers’ diffusion of innovations theory. This model shows that adoption shifts from early adopters (13.5%) to the early majority (34%) at around 10–15% penetration, marking the transition from niche to mainstream.

Crossing 10% market penetration triggers rapid growth as infrastructure, accessibility and social acceptance align. Two very recent examples of this are the smartphone and the internet.

For cryptocurrencies, surpassing 10% penetration in 2025 would signal a similar inflection point, with network effects amplifying adoption — more users increase liquidity, merchant acceptance and developer activity, making crypto more practical for everyday transactions like payments and remittances.

In the U.S., 28% of adults (approximately 65 million people) own cryptocurrencies in 2025, nearly doubling from 15% in 2021. Additionally, 14% of non-owners plan to enter the market this year, and 66% of current owners intend to buy more, reflecting significant momentum. Globally, two out of three American adults are familiar with digital assets, signaling a sharp departure from its earlier speculative reputation. These figures underscore the growing mainstream acceptance of digital assets, aligning with the post-10% adoption surge observed in other transformative technologies.

Crypto’s economic impact spans remittances, cross-border trade, and financial inclusion, particularly in Africa and Asia, where it empowers the unbanked.

Drivers of accelerated penetration

Several factors are propelling crypto past the 10% threshold:

Blockchain technology: Its transparency and security support remittances, supply chain tracking, and fraud prevention, with Ethereum handling over 1.5 million daily transactions.
Financial inclusion: Crypto enables financial access for unbanked populations, especially in Africa and Asia, via mobile and fintech platforms.
Regulatory clarity: Pro-crypto policies in the UAE, Germany, and El Salvador (where bitcoin is legal tender) boost adoption, though uncertainty in India and China poses challenges.
AI integration: Nearly 90 AI-based crypto tokens in 2024 enhance blockchain functionality for governance and payments.
Economic instability: Crypto’s role as a hedge against inflation drives adoption in markets like Brazil ($90.3 billion in stablecoin transactions) and Argentina ($91.1 billion).

Institutional and business adoption

Institutional and business involvement is accelerating digital assets’ mainstream integration. Major financial players like BlackRock and Fidelity are going all in on crypto services and have launched crypto exchange-traded funds (ETFs), with 72 ETFs awaiting SEC approval in 2025.

Businesses are adopting crypto payments to cut fees and reach global customers, particularly in retail and e-commerce. Examples include Burger King in Germany accepting bitcoin since 2019 and PayPal’s 2024 partnership with MoonPay for U.S. crypto purchases. Platforms like Coinbase Commerce and Triple-A, alongside partnerships like Ingenico and Crypto.com, enable merchants to accept crypto with local currency settlements, reducing volatility risks.

DeFi activity has increased significantly in Sub-Saharan Africa, Latin America, and Eastern Europe. In Eastern Europe, DeFi accounted for over 33% of total crypto received, with the region placing third globally in year-over-year DeFi growth.

Challenges and acceleration ahead

Despite its momentum, digital assets face hurdles:

Volatility: Crypto is a very volatile asset, often too volatile for institutional investors.
Security concerns: Hacks, lost private keys and third party risks all contribute to uncertainty among investors.
Regulatory scrutiny: Despite a very friendly U.S. government stance toward crypto and increasingly tolerant governments around the world, there are questions about how crypto will be treated across jurisdictions, specifically as they relate to securities.

Still, the trajectory is promising.

Bullish sentiment and crypto-friendly regulators, coupled with ETF momentum and payment integrations, underscore this trajectory. If innovation continues to balance out with trust, digital assets are likely to follow the internet and smartphone playbook — and grow even faster.

20th May 2025

Widening Government Strategy Holdings Suggests Increased Structural Demand for BTC: StanChart

Government entities increased their holdings of Strategy (MSTR), a bitcoin BTC proxy, in the first quarter according to new data from the U.S. Securities and Exchange Commission (SEC), investment bank Standard Chartered (STAN) said in a research report on Tuesday.

In some cases “MSTR holdings by government entities reflect a desire to gain bitcoin exposure where local regulators do not allow direct BTC holdings,” wrote Geoff Kendrick, head of digital assets research at Standard Chartered.

Strategy, which pioneered the bitcoin treasury model where corporates hold the crypto on their balance sheet as a reserve asset, currently holds 576,230 BTC worth around $59 billion at current market prices.

The bank noted that both Norway's Government Pension Fund and the Swiss National Bank (SNB) increased their Strategy holdings by the equivalent of 700 bitcoin in the first quarter.

The South Korean National Pension Service and the Korea Investment Corporation expanded their holdings by a combined 700 BTC equivalent, the report said.

U.S. state retirement funds, including California, New York and North Carolina, together added to their holdings the equivalent of 1,000 bitcoin, the bank said.

AP Funds in Sweden and Landesbank in Liechtenstein grew their MSTR holdings marginally, the bank noted.

France's Caisse des Dépôts et Consignations (CDC) and the Saudi Central Bank both added a small position in MSTR for the first time, Standard Chartered said.

Bitcoin exchange-traded fund (ETF) direct holding data was “disappointing” overall in the first quarter, the report added.

The bank said the most recent 13F data supports its central thesis that bitcoin will reach $500,000 before President Trump leaves office as the cryptocurrency attracts a wider range of institutional buyers.

9th May 2025

Market Maker Flowdesk Expands Capital Market Offerings With New Institutional Credit Desk

Market maker Flowdesk has launched an institutional credit desk, expanding its footprint in digital asset markets as traditional finance players seek more efficient ways to deploy and access capital into crypto.

Sophisticated institutional counterparties are seeking structured credit products to manage liquidity, hedge exposure, and generate yield across fragmented venues. Flowdesk’s new desk meets that demand by integrating lending, borrowing, and structured credit into its existing OTC and liquidity infrastructure.

“Institutions trading digital assets require more than just efficient execution,” said Reed Werbitt, Flowdesk’s U.S. CEO and chief revenue officer. “They need tools to unlock capital and structure strategies with precision,” he added.

The new desk integrates lending, borrowing, and structured credit directly into Flowdesk’s OTC and liquidity services.

This rollout comes just two months after Flowdesk raised over $100 million to expand headcount and build out an over-the-counter (OTC) derivatives trading desk.

“Our mission is to deliver institutional-grade trading solutions for the digital asset ecosystem,” said Guilhem Chaumont, co-founder and Global CEO of Flowdesk in a release.

“The launch of our Credit Desk is aligned with our commitment to expanding access to advanced digital asset strategies and robust risk management for a broader range of institutional counterparties,” Chaumont said.

Flowdesk’s expansion comes amid increasing U.S. institutional interest in digital assets, and the White House giving the industry a regulatory green light.

The trading firm has always been quite bullish on this narrative.

Back in 2023, at the height of the U.S. Securities and Exchange Commission's (SEC) war on crypto, Flowdesk made the contrarian move to expand its U.S. office even as others in the industry were looking offshore. Chaumont said at the time that the size and sophistication of U.S. capital markets made the risk worth it.

23rd April 2025

Coinbase to Benefit From Increased Institutional Crypto Adoption: Benchmark

Coinbase (COIN) has established the industry's most scaled crypto trading platform with a domestic market share of around 66%, broker Benchmark said in a report Wednesday, while also initiating coverage of the stock.

Benchmark assumed coverage of Coinbase with a buy rating and a $252 price target. The shares were over 4% higher at around $198 in early trading.

The crypto exchange offers a “comprehensive suite of products and services aimed at facilitating the adoption and use of digital assets by both retail and institutional investors,” analyst Mark Palmer wrote.

The broker noted that the stock has almost halved since early December, and at current levels the share price does not reflect the soon to improve crypto environment.

Share price underperformance may be coming to an end as crypto regulatory clarity draws closer in the U.S., particularly for stablecoins, where Coinbase has skin in the game with its involvement in USD Coin (USDC), the report said.

Regulation is coming. Earlier this month, a House of Representatives committee joined Senate counterparts in advancing a bill to be considered by the overall House, bringing stablecoin regulations closer to reality.

“As these key pieces of digital assets legislation are enacted in the coming months, there could be a new wave of demand for crypto by an expanded set of institutional investors,” Palmer said.

The company's diversified product offering is also a positive, and Coinbase's valuation is set to benefit from its 'faster growing non-trading subscription and services offerings,” the report added.

2nd April 2025

Depositary Receipts: A Critical Direct Bridge Between Crypto and TradFi

Digital assets have grown into a multi-trillion-dollar market, yet they remain largely disconnected from traditional finance. Institutional investors increasingly want to own and monetize digital assets, but most banks, broker-dealers and asset managers operate on infrastructure designed for stocks and bonds — not blockchain-based assets. While spot crypto ETFs are an important step toward integration, they only enable passive exposure to the asset class. For digital assets to fully mature, they need a mechanism that bridges them with the entirety of the existing capital markets infrastructure in a familiar, regulated way.

You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

Enter American Depositary Receipts (ADRs). For nearly a century, receipts have served as that bridge for international stocks, debt and commodities, enabling U.S. investors to own foreign assets with the same ease as domestic securities. The first ADR—issued in 1927—set the stage for a system that today facilitates trillions in global investment. ADRs work because they provide fungibility, economic and governance rights and U.S. regulatory oversight, all while ensuring efficient settlement through the Depository Trust & Clearing Corporation (DTCC). They enhance local liquidity and market access, as seen in Chinese companies listing on the London Stock Exchange and U.S. stocks trading in Brazil.

Crypto as the modern foreign market

Crypto-focused ADRs will play a similar role for digital assets. Just like foreign markets, crypto operates outside the traditional U.S. capital markets, making it difficult for most institutions to engage without specialized infrastructure. ADRs provide a regulated, accessible and familiar framework that enables:

Seamless access – Crypto can be included in funds and held at existing banks and brokerage accounts, unlocking traditional capital markets utility.

Efficient two-way convertibility – By not being limited to authorized intermediaries, ADRs provide asset owners the choice to convert underlying crypto and ADRs in-kind.

Cost efficiency – ADR conversions are simple, same-day processes that do not require a NAV calculation. Fees are never deducted by selling the underlying crypto.

Institutional workflow compatibility – Settlement through DTCC via unique identifiers like CUSIP and ISIN ensure seamless alignment with existing workflows.

TradFi demands crypto

Institutional demand for digital assets is surging, but most traditional market participants are still tied to DTCC rails and are not set up to directly interact with crypto. ADRs meet these firms where they are today, while also addressing key regulatory, compliance and operational hurdles:

Regulation – ADRs are SEC-regulated securities with CUSIPs, ISINs and tickers, ensuring investor protection.

Compliance – Only regulated entities (broker-dealers, banks, etc.) custody and service ADRs, maintaining high compliance standards.

Operations – ADRs settle through traditional stock clearing systems, just like any other security.

Unlocking market expansion

By linking the $3 trillion crypto market with the $87 trillion securities market in DTCC, ADRs can drive institutional adoption and unlock new opportunities in the traditional markets, including the following:

24/7 trading – Crypto markets never close, but traditional securities do. ADRs enable round-the-clock trading of traditional securities, mitigating overnight and weekend risk. Since the launch of spot bitcoin ETFs in early 2024, BTC has experienced 10% swings on two separate weekends —moves that institutional investors could not fully capitalize on.

Yield, lending & settlement – ADRs could be used for margin trading, settlement of spot crypto and futures trading, collateralized lending and structured products. Due to their unique ability to link ADR and spot crypto liquidity, ADRs are an ideal instrument to institutionalize these use cases.

Custody choice – Investors can conveniently hold assets on-chain or in traditional brokerage accounts.

Fund inclusion – Due to their security status, ADRs enable crypto ownership in ETFs and institutional portfolios.

Conclusion: a foundation for institutional growth

ADRs revolutionized global investing by making foreign stocks seamlessly available to U.S. investors. Now, there is a unique opportunity to continue this legacy of enabling market access. By providing a regulated, efficient and familiar bridge for institutions to engage with digital assets, ADRs could be the key to unlocking crypto’s next stage of growth and ultimately bring new institutional capital on-chain.

2nd April 2025

China on Watch After U.S. Government Embrace of Bitcoin: Grayscale

The Trump administration’s formation of a U.S. Strategic Bitcoin Reserve might have China re-thinking its hardline stance against crypto and that could be key for accelerated global adoption of BTC, asset manager Grayscale said in a research report Monday.

“The most important country to watch in this regard is China,” said Grayscale, adding that if the country eases its crypto restrictions “it could significantly boost global adoption.”

President Trump last month directed his administration to form a Strategic Bitcoin Reserve to — at a minimum — hold the assets that have been seized by the government.

Grayscale noted that current Chinese government policy bans most crypto activities, such as trading and mining, but permits the holding of digital assets.

Still, “policymakers have allowed an expansion of crypto-related activity in Hong Kong under the ‘one country, two systems’ framework,” Grayscale said.

Local regulators may be taking another look at the legal treatment of cryptocurrencies in the country. China’s Supreme Court and other judicial bodies had a discussion in February about how to treat digital assets in future legal cases, the report noted.

Read more: U.S. Strategic Bitcoin Reserve, Crypto Stockpile a ‘Pivotal Moment’ for Industry: KBW

31st March 2025

Hashgraph Sees Q3 Debut for Hedera-Based Institutional Private Blockchain

Hashgraph, the blockchain development firm focusing on the Hedera (HBAR) network, is building a private, permissioned blockchain for enterprises in highly regulated industries with plans to debut in the third quarter of 2025.

HashSphere, built with Hedera’s technology, aims to bridge private and public distributed ledgers, ensuring compliance with regulations while maintaining interoperability, the company said Monday. Hashgraph is looking to provide services to asset managers, banks and payment providers seeking secure, low-cost cross-border transactions with stablecoins.

While public blockchains offer security and transparency, enterprises in industries like finance and payments often face compliance challenges, particularly with know your customer (KYC) and anti-money laundering (AML) requirements. HashSphere addresses this by restricting access to verified participants, enabling firms to develop tokenized assets, AI-powered services and other blockchain-based products while meeting regulatory standards.

“From the start, the vision for Hedera has been to create ‘shared worlds’ —interconnected networks where enterprises can leverage the power of DLT [distributed ledger technology] without compromising privacy or control,” said Andrew Stakiwicz, head of solutions at Hashgraph, in the release.

The network also integrates Hedera’s existing tools, including the Token Service for managing digital assets and the Consensus Service for recording transactions with trusted timestamps. The platform is compatible with the Ethereum Virtual Machine (EVM), allowing developers to deploy decentralized applications using Solidity and other EVM languages.

Hashgraph said it is currently working with early partners including Australian Payments Plus, Australia’s national payments scheme operator, while adding other users.

“We are interested in HashSphere primarily for its enhanced privacy and regulatory compliance, while also needing network interoperability for the seamless and transparent interchange of stablecoins between public Hedera and private HashSphere and other layer-1 protocols,” said Rob Allen, head of future payments (Web3) strategy at Australian Payments Plus.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.

24th March 2025

Crypto ETFs Gaining Massive Popularity Among U.S. Advisors as ‘Reputational’ Risk Gone

Las Vegas—Financial advisors in the U.S. are committed to crypto exchange-traded funds (ETFs) and are ready to increase their holdings this year.

During a presentation at the Exchange conference in Las Vegas, TMX VettaFi head of research Todd Rosenbluth and senior investment strategist Cinthia Murphy presented results of a survey sent to thousands of financial advisors in the U.S., arguing that crypto is “part of everybody’s conversation today.”

The results showed that 57% of advisors plan on increasing their allocations into crypto ETFs, while 42% will likely maintain their position. Only 1%, practically no one, wants to decrease their position.

“I think last year the message was it’s a reputational risk. Today, there’s no advisor that can’t at least hold a basic conversation in crypto,” Murphy said.

Though the U.S. Securities and Exchange Commission (SEC) approved spot bitcoin ETFs in January 2024, a year before U.S. President Donald Trump took office, the new administration’s enthusiastic embrace of the crypto industry has likely buoyed its wider institutional adoption. Regulators, including the SEC and the Commodity Futures Trading Commission (CFTC), have reversed course on crypto since the start of the Trump presidency, signaling a friendlier and clearer regulatory approach.

Respondents said that they’re particularly interested in crypto equity ETFs, which are funds that invest in publicly traded companies with exposure to the crypto industry, such as Strategy (formerly MicroStrategy) or Tesla.

“You can’t keep up with the space which I think explains why crypto equity has been popular because it’s maybe a little easier to understand and put your fingers around it,” Murphy added.

Since Trump took the Oval Office, Michael Saylor’s MSTR stock has seen a more than 100% rally, making crypto-linked equities more lucrative to both retail and institutional investors. MSTR shares have pared some of their gains since hitting all-time highs; however, the survey results seem to suggest that it is still drawing interest from all parts of the market.

Spot and multi-token ETFs

Crypto equity-linked ETFs aren’t the only ones gaining momentum with financial advisors. About 22% of the survey respondents said they’re looking to allocate capital to spot crypto ETFs, such as the spot bitcoin (BTC) or spot ether (ETH) ETFs.

The third largest group, which about 19% of respondents said they were interested in, was crypto asset funds that hold multiple tokens.

There are numerous crypto ETFs trading on exchanges, with several more in the process of receiving approval from the SEC to be listed in the future.

The past few months have seen a particularly large number of index-based ETFs, meaning they hold a basket of crypto assets that go behind bitcoin and ether. Other launches have included managed funds that provide downside protection for price volatility by allocating a percentage in U.S. Treasuries, for example.

Several issuers have filed to bring further spot crypto ETFs, including Solana (SOL), XRP and Litecoin (LTC), to the market, but the SEC has yet to review them.

“This is a space that’s only growing, and I highly recommend that you get to know the experts in the space … because this is moving fast, and there’s a lot to learn,” Murphy said.

Cheyenne Ligon contributed to the story.

18th March 2025

Crypto Regulatory Clarity Top Catalyst For Industry Growth: Coinbase & EYP Survey

Crypto market regulatory clarity was cited as the top catalyst for growth in the digital asset industry, according to a survey by crypto exchange Coinbase (COIN) and consulting firm EY-Parthenon (EYP).

Coinbase and EY Parthenon surveyed 352 institutional investors between Jan. 13 and Jan. 24 this year.

86% of those surveyed said they had exposure to digital assets or planned to make allocations in 2025, and 84% said they had increased allocations to crypto and crypto-related products in 2024.

59% of respondents said they planned to allocate more than 5% of their assets under management (AUM) to cryptocurrencies in 2025.

An improving regulatory backdrop under Donald Trump’s new administration is viewed as a large tailwind for the digital asset industry. The President has promised to make the U.S. the “crypto capital of the world.”

Altcoins are also becoming increasingly popular amongst institutional investors, according to the survey. 73% of respondents said they held tokens other than bitcoin (BTC) and ether (ETH), led by hedge funds at 80%.

About half of those surveyed said they leverage stablecoins, with yield generation, transactions, and foreign exchange cited as the main use cases.

60% of investors said they preferred to gain exposure to crypto via registered vehicles such as exchange-traded products (ETPs).

The survey focused on decision makers in the U.S. and Europe, with some participation from investors worldwide.

27th February 2025

Crypto for Advisors: DeFi and On-chain Finance

Recent security breaches have rocked the crypto space, highlighting the fact that security will continue to need to be a key focus for providers.

In today’s issue, Marcin Kaźmierczak from Redstone Oracles breaks down why 2025 will be a critical year for DeFi and on-chain finance.

Then, Kevin Tam looks at the institutional adoption of bitcoin as seen from the recent 13-F filings and highlights key positions in Ask and Expert.

–Sarah Morton

You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday.

DeFi Renaissance – Why 2025 Will Be The Year of Decentralized And On-Chain Finance?

The recent hack of ByBit for nearly 401.000 ETH, valued at about $1.5 billion at that time, exposed that security will play a tremendous role in further crypto adoption. Can institutions expand on-chain after such an incident? Undoubtedly. It’s a matter of gradual adoption alongside ensuring top-notch security procedures.

Growing Adoption of Yield-Bearing Assets: Staking, Liquid Staking, Restaking and Liquid Restaking

In traditional finance, yield-generating assets are typically seen as stronger long-term investments than non-productive ones since they provide investors with ongoing cash flow and income. This perspective helps explain why some investors prefer ether over bitcoin. Ether is seen as more “productive” because it powers a network supporting a wide range of decentralized applications, benefiting from network effects. Beyond that, ether can be staked to earn consistent yield, aligning well with traditional valuation methods that prioritize ongoing dividends. The rising interest in staking, especially in the context of yield-generating assets, is evident in the growth of liquid staking, which enables frictionless and capital-efficient staking. This trend accelerated further in 2024 with the emergence of liquid restaking — for instance, ether.fi, a leading liquid restaking platform, saw explosive growth last year, with over $8 billion worth of ether staked through its rails.

Source: DeFi Llama, Total Value Locked in Ether.Fi

The total amount of staked ether is expected to grow and play a significant role in DeFi. Around one-third of all ETH — or $90 billion — is staked, with further inflows anticipated from traditional financial institutions exploring staking. As staking becomes more accessible through FinTech applications, some investors may transition from custodial to non-custodial solutions as they gain a deeper understanding of blockchain technology.

Stablecoin Growth

Global demand for U.S. dollar exposure is immense, and stablecoins are the most efficient way to meet it. Stablecoins like USDC expand access to dollar-denominated wealth preservation and streamline value exchange. In 2024, venture capital investments have flowed into stablecoin projects, and we anticipate further development in this space. Regulatory frameworks like the EU’s MiCA have provided more explicit guidelines, further legitimizing stablecoins and likely driving higher adoption next year. Additionally, stablecoins are being integrated into traditional financial systems. For example, Visa has begun using USDC on networks like Solana to facilitate faster and more efficient payments. Additionally, PayPal entered the market with PUSD, and Stripe made one of crypto’s most significant acquisitions by purchasing Bridge to expand its stablecoin operations. In 2024, the total stablecoin market capitalization reached an all-time high, exceeding $200 billion dollars, and continuing to set new records in 2025.

Source: DeFi Llama, Total Stablecoins Market Cap

Enhanced Interoperability and User-Friendly Non-Custodial Solutions

A key challenge in DeFi is moving funds across networks to access different investments. By 2025, significant progress is anticipated toward eliminating the necessity of bridging funds by introducing a “one-click solution.” This development should simplify the process for new DeFi users, likely attracting more participants to the space. Additionally, wallet providers are expected to improve the security of on-chain finance and streamline the onboarding process by eliminating cumbersome crypto-native setups. This shift, driven by innovations like the Account Abstraction movement, aims to make crypto more accessible and user-friendly for accessing on-chain finance. Currently, the irreversible nature of transactions and the prevalence of sophisticated scams deter many new users. However, improved security features should encourage more individuals to engage with decentralized finance.

Bitcoin Reaching $100K

While simply holding bitcoin on its native network isn’t inherently linked to on-chain finance, we’re witnessing a growing integration of bitcoin with decentralized financial ecosystems. For example, roughly 0.5% of bitcoin’s total supply through staking protocol Babylon is now locked to secure Proof-of-Stake (POS) chains. The increased acceptance of bitcoin by large banks and some governments is anticipated to create trickle-down effects, changing the public’s perception of digital currencies away from being seen purely as a speculative asset or illicit activities toward being a legitimate financial instrument, bringing new users on-chain.

–Marcin Kaźmierczak, COO, Redstone Oracles

Ask an Expert

Q: Can banks hold crypto with SEC’s SAB 122?

A: SEC’s Staff Accounting Bulletin 122 may encourage banks to integrate digital assets into the regulated financial system. By opening competition, banks can compete with centralized exchanges. Banks can offer services like bitcoin-backed lending, staking and custodial services, which treat digital assets more like traditional assets.

This is a positive move into a more flexible regulatory approach and balancing investor protections with the operational realities of financial institutions.

From institutional investment to mainstream recognition, this is another major shift in how the world views and interacts with digital assets.

Q: Which Institutions (e.g. sovereign wealth funds, pensions, companies, etc.) are buying bitcoin?

A: The accumulation by sovereign wealth funds, and pension funds is just getting started.

Mubadala Investment Company PJSC (the wealth fund owned by the government of Abu Dhabi) holds $436 million in one bitcoin ETF with overall assets under management of $302 billion. Abu Dhabi’s sovereign wealth fund (AIDA) manages a combined $1.7 trillion, indicating that their bitcoin investment is a relatively small portion of the overall portfolio.

Additionally, this past fall, Mubadala offered to acquire Canadian asset management firm CI Financial Corp. for $4.6 billion.

In the U.S., the State of Wisconsin Investment Board’s latest report shows its bitcoin ETF holdings have more than doubled from last quarter to over $321 million.

Q: Banking on bitcoin – Which Canadian bank is leading the charge?

A: Recent Q4 2024 SEC filings reveal that Canadian Schedule 1 banks, institutional money managers, pension funds and sovereign wealth funds have disclosed significant bitcoin holdings (see charts).

Notably, Bank of Montreal now tops Canadian banks with $139 million in spot bitcoin ETF investments. And BMO’s bitcoin holdings went from zero to over $100 million in a single year.

Currently, in North America, there are approximately 1,623 large entities holding over $25.8 billion in bitcoin ETPs.

–Kevin Tam, digital asset research specialist

Keep Reading

Citadel announced plans to offer crypto trading and liquidity.

Curious about the Bybit hack? Stephen Sargeant created a LinkedIn post summarizing some of the recovery efforts that are underway with the support of the crypto community.

Coinbase announced last week that the SEC would be dropping its lawsuit against the exchange.

24th February 2025

DekaBank Rolls Out Crypto Trading, Custody Services for Institutions: Bloomberg

DekaBank, a German investment bank with 377 billion euros ($395 billion) in assets under management, introduced cryptocurrency trading and custody services for institutional clients after almost two years of development.

The Frankfurt-based company’s move follows regulatory approval for a crypto custody license from the Federal Financial Supervisory Authority (BaFin), while operating under the supervision of the European Central Bank (ECB), Bloomberg reported.

“We have the necessary experience, required licenses and a tested, ready-to-use infrastructure to support savings banks and our institutional clients,” board member Martin K. Müller told Bloomberg.

DekaBank, the asset manager of the country’s largest financial services group, Sparkassen-Finanzgruppe, is marketing its new offering with a focus on security and regulatory compliance, according to the report.

Other cryptocurrency offerings in the country’s broader savings bank sector have already been introduced. Financial institutions such as Landesbank Baden-Württemberg (LBBW), have partnered with crypto platforms like Bitpanda to allow corporate clients to buy and sell cryptocurrencies.

Meanwhile Germany’s cooperative banks, led by DZ Bank, are planning to roll out a cryptocurrency offering aimed at private customers by the middle of the year. The initiative is being launched alongside IT service provider Atruvia and the Stuttgart Stock Exchange.

DekaBank had not responded to a request for a comment by publication time.

6th February 2025

Crypto for Advisors: Bitcoin Mining Will Be Different in 2025

In today’s issue, Ben Harper from Luxor Technology provides an update on what’s happening with bitcoin mining this year.

Then, Colin Harper from Blockspace Media answers questions on the topic of mining and AI in Ask and Expert.

– Sarah Morton

You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday.

Bitcoin Mining Has Changed — It’s No Longer Just About the Price

The bitcoin mining investment thesis used to be simple — miners thrived when bitcoin’s price soared, and when it fell, they suffered. But in 2024, that equation changed. Bitcoin ETFs, hashrate markets and AI have fundamentally reshaped the industry, reducing miners’ dependence on bitcoin’s price. Here’s why mining is no longer just a bet on bitcoin, and what this means for investors.

2024: The Year Bitcoin Mining Diverged From Bitcoin’s Price

In 2023, Bitcoin mining stocks behaved like a high-beta proxy for Bitcoin, amplifying its moves — soaring higher when bitcoin rallied and crashing harder when it fell. But in 2024, this pattern broke down. Despite bitcoin reaching new all-time highs, mining stocks failed to reclaim their previous peaks.

The table below illustrates the shifting correlation between Hashrate Index’s Crypto Mining Index and bitcoin’s price, comparing weekly prices and returns before and during 2024:

Source: Hashrate Index, June 2020 – December 2024

The takeaway is clear: Bitcoin mining stocks are no longer just a straightforward bet on bitcoin’s price. This divergence stems from four key trends shaping the sector:

1. Institutional Bitcoin Adoption: The Advent of Spot ETFs

The launch of spot bitcoin ETFs in January 2024 reshaped institutional investment in bitcoin. With ETFs amassing over 1.3 million BTC and surpassing $100 billion in assets under management, the appeal of mining stocks as a bitcoin proxy faded. Instead of using miners as an indirect exposure, capital flowed directly into Bitcoin via ETFs, fundamentally shifting market dynamics.

2. The Halving and Its Aftermath: A Squeeze on Miner Economics

Bitcoin’s fourth halving in April 2024 cut the block subsidy from 6.25 BTC to 3.125 BTC per block, slashing miners’ primary revenue source in half. Historically, post-halving bitcoin price surges have helped offset lower rewards, but this time, miners faced additional headwinds:

Record-high network difficulty. Rising competition reduced individual miner rewards.

Falling transaction fees. Lower demand for blockspace diminished a crucial secondary revenue stream.

Hashprice collapse. Despite bitcoin’s rally, hashprice, an all-in measure of mining revenue per unit of computation (i.e., hashrate), plummeted 75%.

While bitcoin’s price soared 120% throughout the year, miners struggled to maintain profitability, leading to consolidation and strategic pivots within the industry.

Source: Hashrate Index

3. The Rise of Hashrate Derivatives: A Game-Changer for Miners

One of the most significant financial developments in bitcoin mining in 2024 was the rapid expansion of the hashrate derivatives market. This emerging market allowed miners to hedge future revenue streams and reduce exposure to bitcoin price volatility, fundamentally changing how they manage risk.

Traditionally, mining revenues were at the mercy of bitcoin’s daily price swings, making it difficult for operators to forecast cash flows or secure financing. However, with the rise of hashrate forward markets, miners could sell future hashrate production at a fixed price, locking in revenue months in advance. This financial instrument functions similarly to commodity futures in the energy sector, where electricity producers pre-sell power contracts to stabilize income.

In 2024, these once-nascent markets saw explosive growth. Over-the-counter (OTC) volumes surged more than 500% year-over-year on Luxor’s hashrate forward market, with contract durations extending up to 12 months. Meanwhile, regulated exchange trading took a major step forward with Bitnomial launching hashrate futures, making it the first regulated exchange to offer a bitcoin mining derivative product.

The maturation of hashrate forward markets signals a new era in mining finance — one where miners have greater control over their revenue streams, better access to capital, and improved resilience against bitcoin price volatility.

4. Bitcoin Mining Meets AI & HPC: A Convergence of Industries

With mining profits under pressure, many firms are pivoting to AI and high-performance computing (HPC) to diversify revenue. Bitcoin mining infrastructure shares key similarities with AI data centers — both require vast power and cooling capacity. However, the shift isn’t easy: AI infrastructure is more expensive per megawatt (millions vs. hundreds of thousands for bitcoin mining), requiring significant capital investment.

Some miners are embracing hybrid models, allocating some of their computing power to AI workloads while maintaining bitcoin mining operations. Firms like HIVE Digital Technologies, Hut 8, Core Scientific, and Bit Digital have already made the leap, securing lucrative AI contracts to grow and stabilize their cash flows.

Final Thoughts

Bitcoin mining in 2025 is no longer just about bitcoin’s price. Institutional capital, hashrate derivatives and AI-driven diversification are reshaping the industry, giving miners new tools to manage risk and optimize revenue. At the same time, post-halving pressures, rising competition and infrastructure costs have made efficiency and adaptability more critical than ever.

For investors and advisors, understanding these shifts is essential. Mining stocks no longer move in lockstep with bitcoin, and new financial instruments are changing how miners operate. As the industry continues to mature, those who recognize these structural changes will be better positioned to navigate the opportunities ahead.

– Ben Harper, director, Luxor Technology

Ask an Expert

Are bitcoin miners actually serious about breaking into the AI market?

Absolutely. Since 2022, bitcoin miners have been increasingly exploring AI and high-performance compute (HPC) business lines. Some of the earliest movers in this shift were Hut 8, Hive, IREN, Core Scientific and Bit Digital. More recently, Riot put its 600 MW expansion at Corsicana on pause to evaluate the site for AI load, Cipher received a $50 million investment from SoftBank for its own AI project, and Lancium and Crusoe Energy are building a multi-gigawatt campus for AI as part of Project Stargate.

How will bitcoin miners tackle their AI transitions? Is there a one-size-fits-all approach?

AI/HPC strategies vary from miner to miner. Hut 8 and Bit Digital, for example, have opted to acquire existing data center businesses rather than build their own data centers from scratch or retrofit existing infrastructure. Core Scientific, on the other hand, is converting the massive power assets and infrastructure it has on hand for AI/HPC load in its partnership with CoreWeave (Riot could follow a similar model should it decide to convert portions of its Corsicana campus into an AI data center). And others, like Hive and IREN, have purchased GPUs to operate AI/HPC cloud services within their existing facilities. Each of these strategies have tradeoffs (the Hut 8 and Bit Digital model are low risk, low reward, while Core Scientific’s approach is high risk, high reward), and we will have a better idea of which approach is the most successful over the next few years.

With strong market demand for AI, will bitcoin miners still mine bitcoin?

For now, plenty of bitcoin miners — including MARA, Cleanspark and Bitfarms — are still focusing on bitcoin mining instead of chasing the AI/HPC golden rabbit. Even if bitcoin miners convert parts of their infrastructure into AI/HPC load, they will likely still mine bitcoin, even if they reduce their focus on this pursuit. Ultimately, bitcoin mining and AI/HPC are more complementary than competitive, as miners can use bitcoin mining to monetize energy that they have already paid for when AI/HPC demand is low.

– Colin Harper, editor-in-chief, Blockspace Media

Keep Reading

The first ever bitcoin mining ETF is live, recently launched by Grayscale.

Sixteen U.S. states are eyeing bitcoin strategic reserves, along with the federal government.

At a press conference on Tuesday, U.S. crypto and AI czar David Sacks discussed regulatory clarity, fostering innovation, consumer protection, bitcoin reserves and stablecoins, among other topics.

5th February 2025

The Great Accumulation: A Corporate Race for Bitcoin

For decades, corporate treasuries have relied on cash, bonds and short-term investments to preserve capital. But inflation, devaluing fiat currencies and near-zero interest rates have challenged this approach. A new dark horse is emerging and corporate finance is about to change forever.

BTC as a corporate reserve asset

Historically, corporations have kept substantial cash reserves for both stability and liquidity. However, as Michael Saylor, Executive Chairman of MicroStrategy has argued, cash is like a melting ice cube — losing its purchasing power due to monetary debasement. Bitcoin offers an alternative: an asset with a fixed supply, global liquidity and asymmetric upside.

Since 2020, MicroStrategy has aggressively accumulated bitcoin, transforming its corporate balance sheet into a quasi BTC bank. The company issues convertible debt and equity to fund its purchases, leveraging a traditional finance approach to building a bitcoin treasury. In 2024 alone, MicroStrategy acquired 257,000 BTC. This strategy has indirectly turned MicroStrategy into a publicly traded bitcoin ETF and accumulation machine, granting shareholders exposure to BTC through its publicly traded stock $MSTR.

You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

Two key metrics: bitcoin per share & BTC yield

Microstrategy has popularized two key metrics every corporation studying this strategy needs to understand intimately: bitcoin per share (BPS) and BTC yield.

Bitcoin per share (BPS): The number of bitcoin held per outstanding share. This metric allows investors to measure a company’s indirect BTC exposure.

BTC yield: The percentage change in the number of bitcoin per share over time. This KPI attempts to reflect how efficiently a company acquires BTC.

Source: MSTRtracker.com

The corporate supercycle

While many corporations maintain traditional treasury strategies, a fundamental shift in corporate finance is emerging. Over 70 publicly traded companies now hold bitcoin on their balance sheets, including Tesla, Coinbase and Block. Even companies outside the technology and finance sectors are adopting this approach, demonstrating its broad applicability across industries.

This adoption represents more than a trend — it’s a transformation in how companies can create and preserve shareholder value. The regulatory environment is evolving to support this shift in three critical ways:

SAB21’s reversal has fundamentally enhanced bitcoin’s utility as a treasury asset. By enabling regulated financial institutions to provide custody services, corporations can now leverage their bitcoin holdings more efficiently through established banking relationships.

The FASB’s landmark accounting changes create a more accurate reflection of bitcoin’s economics on corporate financial statements. Under these rules, companies accumulating bitcoin can now recognize appreciation in their earnings statements, providing a clear mechanism for value creation through strategic bitcoin acquisition.

The proposed Bitcoin Act 2024 and broader regulatory clarity signal growing institutional acceptance, reducing systemic risks for corporate adoption.

Companies can now generate earnings growth through strategic bitcoin accumulation while simultaneously building a position in an asset with significant potential for appreciation. This combination of current earnings impact and future value potential echoes classic Warren Buffett principles of finding businesses that can both generate current returns and reinvest capital at attractive rates.

The transformation ahead isn’t merely about adding bitcoin to balance sheets — it’s about fundamentally rethinking corporate treasury management for an era of digital scarcity. Companies that understand this shift early will have a significant advantage in building treasury positions at attractive prices, much like early internet adopters.

We’re entering a new era in corporate finance, where bitcoin’s unique properties combine with evolving financial infrastructure to create unprecedented opportunities for value creation and preservation.

The companies that recognize and act on this shift early will likely emerge as the Berkshire Hathaways of the digital age.

21st January 2025

Bitcoin No Longer a Niche Investment as Institutional Adoption Takes Off: WisdomTree

The institutionalization of crypto markets means that bitcoin (BTC) is no longer considered a niche investment, and increased adoption is forcing hesitant investors to reconsider the asset class, WisdomTree said in a report Monday, which looked at crypto trends for 2025.

The investment manager noted that portfolios with allocations to bitcoin are consistently outperforming those that don’t hold the world’s largest cryptocurrency.

Asset managers need to integrate the digital asset into multi-asset portfolios or “risk falling behind in a rapidly evolving financial landscape,” wrote analyst Dovile Silenskyte, adding that bitcoin adoption is expected to grow this year as more clients demand exposure to the asset class.

The launch of spot exchange-traded funds (ETFs) in the U.S. helped take crypto more mainstream in 2024. This momentum is expected to continue this year as the regulatory environment becomes more friendly in the U.S. under President Trump, and as more countries approve exchange-traded products (ETPs) for altcoins such as solana‘s SOL and XRP, WisdomTree said.

“This next wave of altcoin ETPs will expand the diversity of crypto investment opportunities and further integrate cryptocurrencies into the global financial system,” Silenskyte wrote.

The Ethereum blockchain’s role as the “backbone of decentralized finance (DeFi), non-fungible tokens (NFTs) and Web3 is unmatched,” the report said, but its scalability issues are still a problem.

Still, recent upgrades including Dencun are expected to drive layer-2 adoption on the blockchain, the report noted.

Stablecoins are “becoming indispensable to the global financial system,” and networks such as Solana are ideal for stablecoin payments and remittances, WisdomTree said.

Tokenization, the process of putting the ownership of real world assets on the blockchain, will expand dramatically in 2025, and will transform industries from private equity to venture capital, the report added.

9th January 2025

Crypto for Advisors: 2025 Outlook

In today’s issue, Leo Mindyuk from MLTech provides a crypto outlook for 2025 and highlights key factors that could drive the adoption of these assets.

Then, Miguel Kudry from L1 Advisors shares his insights on the topic in Ask and Expert.

–Sarah Morton

You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday.

2025 Outlook for Crypto Adoption: Building Bridges to the Mainstream

The crypto industry is entering 2025 with a renewed sense of purpose. Over the past year, the sector has witnessed key developments that signal crypto’s increasing integration into traditional finance (TradFi) and broader adoption of crypto assets, especially bitcoin. However, the road ahead will test the resilience of this growing ecosystem. As we assess the outlook for 2025, several factors emerge as critical to shaping the adoption trajectory: regulatory clarity, institutional participation, and technological innovation.

1. Regulatory Clarity: Turning Uncertainty Into Institutional Guidelines

As I’ve briefly discussed on my CoinDesk podcast about election night results and the price action around it, regulatory clarity is emerging as a pivotal factor for crypto adoption. The market has already started pricing in the expectation that newly elected officials will bring long-awaited structure to the digital asset ecosystem. We will see some of those expectations starting to play out this year. Key areas where we are likely to see more clarity include:

a) Definition and classification of digital assets: The U.S. is expected to refine how digital assets are classified – whether as securities, commodities, or some combination. This clarity will directly impact how tokens are issued, traded, regulated, and taxed.

b) Stablecoins: These are likely to be a major focus for regulators due to their transformative real-world use cases and potential impact on financial stability.

c) Taxation of crypto transactions: Recent changes have already been made, and we will likely see clearer tax reporting requirements for digital assets, various associated activities, and various industry players.

Additional topics such as tokenization—including real-world assets—custodial and non-custodial wallets, regulated trading venues, decentralized finance (DeFi), anti-money laundering (AML) and know your customer (KYC) compliance, and consumer protections will also be actively discussed and potentially acted upon.

2. Institutional Participation: ETFs as a Catalyst

In 2024, crypto ETFs experienced explosive growth, with billions in net inflows and notable launches. With new products, crypto ETFs now represent a rapidly expanding financial market segment, attracting significant investor interest and outperforming traditional funds. We will likely see a variety of adjacent products.

For 2025, growing inflows and high volumes in BTC and ETH ETFs will likely continue to validate crypto as an asset class and streamline access for retail and institutional investors. This will open the path for other single-asset ETFs, multi-asset ETFs, and various adjacent ETFs (e.g., leveraged, inverse, market-timing, volatility). If regulatory clarity progresses fast enough, we may see the U.S.’s first crypto yield-generating ETFs (e.g., staking). These products could bring additional investor interest to the asset class and increase inflows into passive and active investment products.

3. Technological Innovation: The Convergence of Blockchain Scalability and AI

Technological advancements in 2025 will be driven by Layer-2 blockchain scalability and AI integration. Rollups, zero-knowledge proofs, and interoperability will enhance transaction efficiency and user experience for decentralized applications (dApps) and DeFi. Simultaneously, AI agents operating on decentralized networks will solve and optimize a variety of tasks and interact with users and each other. This synergy simplifies Web3 interactions and ensures secure, transparent execution of AI decisions on blockchain. Together, these innovations will lower barriers to entry, attract developers and users, and accelerate mainstream adoption, making 2025 a pivotal year for blockchain and AI convergence.

Summary

The outlook for crypto adoption in 2025 is overwhelmingly positive, but not without challenges. Regulatory clarity, institutional participation, and technological innovation will be the pillars of growth. The question isn’t whether crypto will gain mainstream acceptance—it’s how fast and in what form. As we approach this next phase, those who adapt to the evolving landscape will lead the charge in shaping the future.

– Leo Mindyuk, CEO, ML Tech

Ask an Expert

Q. What were the most impactful developments in the crypto market over the past year, and how have they shaped crypto adoption?

The most significant development in crypto last year was the political shift, with President-elect Donald Trump making crypto a key part of his platform. Markets are only beginning to price in the impact of the Executive and Legislative branches, along with financial regulators, that not only refrained from fighting the crypto industry but also encouraged crypto innovation within the United States. Beyond bitcoin adoption and the potential establishment of a national strategic bitcoin reserve, the broader implications for financial markets are still unclear to many market participants. Some of the world’s largest financial institutions that were previously on the sidelines are now actively developing their crypto strategy in response to the new pro-crypto administration.

Q. How is the evolving regulatory landscape likely to impact crypto markets and institutional involvement in 2025?

The SEC’s regulation-by-enforcement approach has had a far-reaching impact on the crypto markets. A shift to a neutral – or even positive – stance means financial professionals and institutions will need to actively explore how to better serve their customers who are already engaged with crypto, particularly given its decisive role in the election. Additionally, they will need to adapt their offerings to remain competitive in a world where financial markets and assets increasingly operate on crypto rails. Financial advisors, in particular, now have more opportunities to serve their clients by incorporating crypto allocations and existing crypto portfolios into comprehensive financial planning and strategy.

Q. Given the macroeconomic climate, how should financial professionals think about integrating crypto into broader investment strategies in 2025?

The year 2025 will mark a pivotal shift for crypto, transitioning from merely being an asset class to becoming the infrastructure that underpins a growing portion of all asset classes. Put differently, with the adoption of crypto rails, financial professionals will be better equipped to respond to the macroeconomic climate, further accelerating the flywheel of asset tokenization, portfolio allocations, and broader adoption.

– Miguel Kudry, CEO, L1 Advisors

Keep Reading

J.P. Morgan’s retail platform E-Trade is considering adding crypto trading.

The SEC lawsuit against Coinbase has been paused and is moving to the second circuit.

Czech National Bank opens up discussions around bitcoin as they consider reserve diversification options.

18th December 2024

Out With the “Altcoin,” in With the Asset Class

Following the U.S. presidential election, crypto’s headwinds have seemingly dissipated. Since early November bitcoin has reached $100K amid regulatory wins such as the nomination of crypto-friendly Paul Atkins to replace Gary Gensler as SEC chair, the naming of crypto advocate David Sacks as the incoming White House “AI and Crypto Czar,” and Congressman French Hill’s appointment to head the House Financial Services Committee. With election season coming to a crypto-favorable close in 2024, some are forecasting “altcoin” season, a period of outperformance for non-BTC crypto assets, to continue in 2025 — but is this the right way to characterize digital assets broadly?

Market commentators sometimes hastily sort the crypto economy into two oversimplified groups: 1) bitcoin (and now for some, ether) and 2) alternative or “alt” coins. In the early innings of digital assets, this dual categorization made sense as bitcoin was pioneering the use of blockchain technology and other use cases were still finding their footing. Nearly 16 years since bitcoin’s inception, an explosion of crypto innovation and sector-specific applications has pushed blockchain assets beyond the binary classification of bitcoin and “everything else.” Investors must now treat crypto as a diverse multi-sector asset class.

You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

Putting the constituents of the digital asset class in perspective

The “altcoin” moniker may give the impression that digital assets other than bitcoin lack in size and industry-specific purpose compared to components of other asset classes such as equity markets. Figure 1 below compares the market caps of similarly sized constituents of the S&P500 Index to those of prominent crypto assets ex-BTC, and shows similarities between these asset classes not only in terms of component size, but also in terms of sector diversification:

Figure 1: Market Caps of Top 25 (ex-BTC) Crypto Assets vs. S&P 500 Constituents Smaller than ETH

Not only do the stocks of certain well-known companies highlighted above resemble the top 25 crypto assets in size (ex: Solana has a market cap similar to that of UPS), but both asset classes also span a variety of industries within their respective markets. While the number of digital assets shown above is relatively sparse compared to the number of stocks, these crypto assets alongside the market’s new and innovative crypto projects are likely to continue expanding the size and breadth of the asset class even further over time.

Constructing diversified digital asset portfolios for the long-run

Taking a binary “bitcoin vs. alts” approach to digital asset investing may forgo portfolio construction benefits both within crypto investments and across your overall asset allocation. Obtaining thoughtfully constructed, diversified, and intentional exposure to all crypto sectors and use cases helps defray the risks of asset concentration, ensures your portfolio is exposed to the full value proposition of the asset class, and provides a larger number of return sources within your broader asset allocation. Given the fast-changing, innovative nature of the digital asset landscape, it is crucial to construct crypto allocations that can adapt alongside the breadth of the asset class. This can be accomplished by adopting a process to choose the universe of assets to include in your portfolio, adjusting this universe over time, and allocating sensibly to these assets via either passive or active management. Embracing the broader crypto economy as an asset class within your investment portfolio means allocating to digital assets via strategies that are built for the long-term.

Conclusions for an evolving asset class

Focusing on bitcoin vs. “everything else” may obscure the already meaningful and fast-growing footprint of many crypto assets and could cause investors to miss out on longer-term portfolio benefits associated with comprehensive investment within the asset class.