The markets are in crisis, with the price of Bitcoin (BTC) sinking below the $100,000 threshold. Despite a downward correction in the markets, institutions continue to adopt digital assets in their operations.
In the US, a major digital trading platform and a licensed bank have opened cryptocurrency trading to institutional clients. The derivatives arm of the Singapore Exchange is also venturing into digital assets, opening up perpetual futures trading on cryptocurrencies.
Policy changes have allowed some companies to offer cryptocurrency exchange-traded products (ETPs), expanding the availability of institutional financial products related to cryptocurrencies.
Markets are taking a beating this week, but institutions are looking long term and expanding their role in the crypto industry.
Corporations Now Control 14% of Bitcoin Supply
Institutions that offer Bitcoin-related products, as well as public and private companies that hold Bitcoin on their balance sheets, have increased corporate BTC holdings to 14% of the 21 million cryptocurrency supply.
This figure excludes the significant holdings of Bitcoin mining companies, sovereign nations like El Salvador, and decentralized financial protocols.
The increasing concentration of Bitcoin supply in the hands of a small number of corporations has raised concerns about centralization. Crypto analyst Willy Woo said Bitcoin is on the same “nationalization path” as gold in the 1970s.
Related: Corporate Purchases Spark Debate Over Bitcoin’s Long-Term Decentralization
However, Nicolai Søndergaard, a research analyst at crypto intelligence platform Nansen, previously told Cointelegraph that people should not worry.
“It does not change the fundamental properties of Bitcoin. The network remains decentralized even if custody becomes more centralized,” he said.
SoFi to implement cryptocurrency trading
Digital financial services SoFi announced on November 11 that it is rolling out cryptocurrency trading for retail customers in the US.
CEO Anthony Noto said SoFi was the only nationally licensed bank offering crypto trading services. He said the company is more comfortable offering services related to digital assets after updated policies from the US Office of the Comptroller of the Currency (OCC).
“One of the holes we’ve had over the last two years was in cryptocurrencies, the ability to buy, sell and hold cryptocurrencies. We weren’t allowed to do that as a bank. It wasn’t allowed,” he said.
But in March, the OCC relaxed its policies regarding cryptocurrencies and banks, stating: “Custody of crypto assets, certain stablecoin activities, and participation in independent node verification networks, such as distributed ledger, are permitted for national banks and federal savings associations.”
Singapore Stock Exchange launches perpetual futures
The derivatives arm of the Singapore Exchange (SGX) announced that it will launch perpetual futures trading on November 17.
An announcement from the exchange attributed its new offering to “growing institutional demand for cryptocurrencies, the convergence of TradFi and crypto-native ecosystems.”
Bitcoin and Ether (ETH) based perpetual futures on SGX will only be available to accredited and expert investors. They will be launched on November 24 and will come under the regulatory purview of the Monetary Authority of Singapore (MAS).
This is only the second launch of perpetual futures trading in Singapore. On July 23, EDXM International launched perpetual futures trading as well as 44 different trading products. Perpetual futures, which allow traders to bet on asset prices with no expiration or market close date and with the potential for high leverage, are one of the most popular forms of cryptocurrency trading globally.
Institutional staking takes a step forward with IRS approval
The US tax enforcement agency, the Internal Revenue Service, has approved rules that will allow crypto ETPs to stake digital assets and share rewards with investors.
Specifically, it will allow “exchange-traded trusts that hold a single digital asset such as Ethereum (‘digital asset ETP’) to earn staking rewards while maintaining tax classification as grantor trusts.”
According to Roger Wise of the law firm Willkie Farr & Gallagher, grantor status is particularly important to simplify tax reporting on ETPs.
Announced on Nov. 10, Treasury Secretary Scott Bessent said the move would improve innovation and help make the United States more competitive in the cryptocurrency industry. “Digital asset ETPs avoid entity-level taxation and provide an attractive vehicle for retail investors, who receive simplified tax reporting each year, similar to reporting for an ETF or mutual fund.”
The move brings more certainty to institutions looking to offer staking ETPs, particularly amid growing investor demand.
Related: Hawkish Fed Triggers $360M Crypto Outflows as Solana ETFs Buck the Trend
Hong Kong launches more blockchain bonds for institutional investors
The Hong Kong government is launching its third blockchain bond offering. Announced on November 11, the bond tranche is worth HK$10 billion ($1,284,438).
The bonds, which will be denominated in Hong Kong dollars, renminbi, US dollars and euros, have been popular among institutional investors. According to the Hong Kong Monetary Authority:
“The issuance continued to attract subscriptions from a broad spectrum of institutional investors globally, including asset managers, banks, insurance companies, private banks and others, including a substantial number of first-time digital bond investors.”
Markets may be going through a rough patch, but institutions are looking to the future as new financial products continue to be developed, based on blockchain technology and cryptocurrencies.
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