Markets are in a slump, with Bitcoin’s (BTC) price sinking below the $100,000 threshold. Despite a downward correction in markets, institutions continue to adopt digital assets in their operations.
In the US, a major digital trading platform and chartered bank has opened crypto trading to institutional clients. The derivatives arm of the Singapore Exchange is getting into digital assets as well, opening up perpetual futures trading in crypto.
Policy changes have allowed some firms to offer crypto exchange-traded products (ETPs), expanding the availability of crypto-related institutional financial products.
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’s supply
Institutions offering Bitcoin-related products, as well as public and private companies holding Bitcoin on their balance sheets, have increased corporate BTC holdings to 14% of the crypto’s 21 million supply.
This figure excludes the significant holdings boasted by Bitcoin mining firms, sovereign nations such as El Salvador and decentralized finance protocols.
The increasing concentration of Bitcoin’s supply in the hands of a small number of corporations has raised concerns over centralization. Crypto analyst Willy Woo said that Bitcoin is on the same “nationalization path” as gold in the 1970s.
Related: Corporate buying stirs debate over Bitcoin’s long-term decentralization
However, Nicolai Søndergaard, a research analyst at crypto intelligence platform Nansen, previously told Cointelegraph that people shouldn’t be worried.
“It doesn’t change Bitcoin’s fundamental properties. The network remains decentralized even if custody becomes more centralized,” he said.
SoFi to roll out crypto trading
Digital financial services SoFi announced on Nov. 11 that it is rolling out crypto trading for retail clients in the US.
CEO Anthony Noto said that SoFi was the only nationally chartered bank that offers crypto trading services. He said the company is more comfortable offering digital asset-related services after updated policies from the US Office of the Comptroller of the Currency (OCC).
“One of the holes we’ve had for the last two years was in cryptocurrency, the ability to buy, sell and hold crypto. We were not allowed to do that as a bank. It was not permissible,” he said.
But in March, the OCC relaxed its policies regarding crypto and banks, stating, “Crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks such as distributed ledger are permissible for national banks and federal savings associations.”
Singapore exchange launches perpetual futures
The derivatives arm of Singapore Exchange (SGX) announced that it will launch perpetual futures trading on Nov. 17.
An announcement from the exchange attributed its new offering to “rising institutional crypto demand, converging TradFi and crypto-native ecosystems.”
Bitcoin and Ether (ETH)-based perpetual futures on SGX will only be available to accredited and expert investors. They’ll launch on Nov. 24 and will fall 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 without an expiry date or market close and with potential for high leverage, are one of the most popular forms of crypto trading globally.
Institutional staking takes one step forward with IRS approval
The US’s 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 like Ethereum (‘Digital Asset ETPs’) to earn staking rewards while maintaining tax classification as grantor trusts.”
According to Roger Wise at law firm Willkie Farr & Gallagher, the grantor status is particularly important for simplifying tax reporting on ETPs.
Announced on Nov. 10, Treasury Secretary Scott Bessent said the move would improve innovation and help make the US more competitive in the crypto industry. “Digital Asset ETPs avoid entity-level tax and provide an attractive vehicle for retail investors, who receive simplified tax reporting each year similar to reporting by an ETF or mutual fund.”
The move brings more certainty to institutions that want to offer ETPs with staking, particularly amid increasing demand from investors.
Related: Hawkish Fed triggers $360M in crypto outflows as Solana ETFs buck trend
Hong Kong launches more blockchain bonds for institutional investors
The government of Hong Kong is releasing its third blockchain bond offering. Announced on Nov. 11, the tranche of bonds is worth 10 billion Hong Kong dollars ($1,284,438).
The bonds, which will be denominated in Hong Kong dollars, renminbi, US dollars and euro, have reportedly been popular with institutional investors. According to the Hong Kong Monetary Authority:
“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.”
Markets may be in a rough patch, but institutions are looking ahead as new financial products, built on blockchain technology and cryptocurrencies, continue to develop.
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