Markets are experiencing a downturn, with Bitcoin's (BTC) price falling below the $100,000 mark. Despite this market correction, institutions are continuing to integrate digital assets into their operations.
In the United States, a prominent digital trading platform and chartered bank has introduced cryptocurrency trading for its institutional clients. Concurrently, the derivatives arm of the Singapore Exchange is expanding into digital assets by launching perpetual futures trading for cryptocurrencies.
Policy adjustments have facilitated the offering of crypto exchange-traded products (ETPs) by certain firms, thereby broadening the availability of institutional financial products related to cryptocurrencies.
While markets are facing significant challenges this week, institutions are adopting a long-term perspective and increasing their involvement in the cryptocurrency industry.
Corporations Now Control 14% of Bitcoin’s Supply
The combined holdings of institutions offering Bitcoin-related products, along with public and private companies that maintain Bitcoin on their balance sheets, have pushed corporate BTC holdings to 14% of the cryptocurrency's total supply of 21 million.
This figure does not account for the substantial holdings of Bitcoin mining firms, sovereign nations like El Salvador, or decentralized finance protocols.
The increasing concentration of Bitcoin's supply within a smaller group of corporations has sparked concerns regarding centralization. Crypto analyst Willy Woo has suggested that Bitcoin is following a similar "nationalization path" as gold did in the 1970s.
However, Nicolai Søndergaard, a research analyst at the crypto intelligence platform Nansen, has previously stated that these developments should not be a cause for concern. He explained that such shifts do not alter Bitcoin's fundamental properties and that the network remains decentralized, even if custody becomes more centralized.
SoFi to Roll Out Crypto Trading
SoFi, a digital financial services company, announced on November 11 that it is introducing cryptocurrency trading services for its retail clients in the United States.
CEO Anthony Noto highlighted that SoFi is the only nationally chartered bank offering crypto trading services. He indicated that the company feels more confident in providing digital asset-related services following updated policies from the U.S. Office of the Comptroller of the Currency (OCC).
Noto stated that for the past two years, the inability to buy, sell, and hold cryptocurrency was a significant limitation, as it was not permissible for the bank. However, in March, the OCC relaxed its policies concerning crypto and banks, clarifying that crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks like distributed ledgers are permissible for national banks and federal savings associations.
Singapore Exchange Launches Perpetual Futures
The derivatives division of the Singapore Exchange (SGX) announced on November 17 that it will be launching perpetual futures trading.
The exchange attributed its new offering to "rising institutional crypto demand, converging TradFi and crypto-native ecosystems."
Perpetual futures based on Bitcoin and Ether (ETH) will be exclusively available to accredited and expert investors on SGX. These will commence trading on November 24 and will operate under the regulatory oversight of the Monetary Authority of Singapore (MAS).
This marks the second launch of perpetual futures trading in Singapore. EDXM International previously introduced perpetual futures trading, along with 44 other trading products, on July 23. Perpetual futures, which enable traders to speculate on asset prices without expiration dates or market closures and offer potential for high leverage, are among the most popular forms of cryptocurrency trading globally.
Institutional Staking Takes One Step Forward With IRS Approval
The U.S. tax enforcement agency, the Internal Revenue Service (IRS), has approved rules that will permit crypto ETPs to engage in staking digital assets and distribute the resulting rewards to investors.
Specifically, these rules will allow "exchange-traded trusts that hold a single digital asset like Ethereum ('Digital Asset ETPs') to earn staking rewards while maintaining tax classification as grantor trusts."
According to Roger Wise of the law firm Willkie Farr & Gallagher, maintaining grantor trust status is crucial for simplifying tax reporting for ETPs.
Announced on November 10, Treasury Secretary Scott Bessent stated that this move is expected to foster innovation and enhance the U.S.'s competitiveness within the crypto industry. He further elaborated that Digital Asset ETPs avoid entity-level taxation and offer an attractive investment vehicle for retail investors, who will benefit from simplified annual tax reporting comparable to that of ETFs or mutual funds.
This development brings greater clarity and certainty for institutions looking to offer ETPs with staking capabilities, particularly in light of increasing investor demand.
Hong Kong Launches More Blockchain Bonds for Institutional Investors
The government of Hong Kong is proceeding with its third offering of blockchain-denominated bonds. Announced on November 11, this tranche of bonds is valued at 10 billion Hong Kong dollars (approximately $1,284,438).
These bonds, which will be issued in Hong Kong dollars, renminbi, U.S. dollars, and euro, have reportedly garnered significant interest from institutional investors. The Hong Kong Monetary Authority stated:
"The issuance continued to attract subscriptions by a wide spectrum of institutional investors globally, covering asset managers, banks, insurance companies, private banks and others, including a substantial number of first-time investors in digital bonds."
While markets may be experiencing a challenging period, institutions are demonstrating a forward-looking approach as new financial products, built upon blockchain technology and cryptocurrencies, continue to evolve.