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As the Dubai Token2049 Conference has concluded, one key point is that the story about Bitcoin (BTC) is rapidly expanding beyond its traditional role as a store worthy of potential defi assets competing with Ethereum and Solana.

Prominent industry players like Franklin Templeton see this development as a positive step and believe it will increase the usefulness of Bitcoin without diluting its core attraction as a valuable repository as a purist and maximalist fear.

“I don’t think that focusing on Bitcoin Defis will dilute or complicate the core story of Bitcoin,” explained Kevin Farrelly, principal of blockchain venture capital at Franklin Templeton and vice president of digital assets in a keynote address at the Bitcoin side event this week. “Instead, we’re extending Bitcoin utility for certain types of investors. This is technically refined enough to optimize for your yield, security, or custom portfolio needs.”

“These users are not replacing the essays in the ‘value store’. They’re building on that,” Ferally added. “It’s not diluting the story, it’s an evolution of infrastructure.”

Franklin Templeton is an investor in Bitlayer, a BitVM that functions as a calculation layer for Bitcoin while maintaining the security of the mainnet. It offers new features such as faster transaction processing, lower fees, smart contracts and advanced obligation integration, as well as features that are not natively supported by base layer Bitcoin alone.

Franklin Templeton’s Bitcoin ETF (EZBC) has registered a net inflow of $260 million since it debuted on January 11th last year. As of May 1, the fund had 5,213 BTC and has over $500 million in managed assets, slightly above $97,000 at Bitcoin’s current price.

Expansion beyond the value appeal store

Nakamoto’s original vision for the Bitcoin blockchain was driven by creating a decentralized financial system that promotes financial sovereignty and privacy, and by eliminating the need for intermediary in transactions. But over a decade since its founding, Bitcoin, the native cryptocurrency of blockchain, quickly gained a reputation as digital gold, a trusted storage for value.

Bbitcoin’s market capitalization today exceeds $1.9 trillion, with nearly 60% of the total market value of the digital asset market value at $3.12 trillion per Coindesk data. It is the most liquid cryptocurrency, with an average of billions of dollars in daily trading volumes around the world, and several publicly listed companies employ it as a reserve asset.

Additionally, several regulated alternative investment instruments associated with BTC have emerged over the years, allowing traditional market participants to be exposed to cryptocurrency.

For example, 11 spot ETFs listed in the US have raised nearly $40 billion in investor money since their debut last January, according to Data Source’s Farside Investors. Meanwhile, Ether ETFs saw net inflows of just under $3 billion.

The powerful institutional incorporation of BTC is widely attributed to its simple and compelling narrative as digital gold. It is an easy-to-understand asset compared to complex platforms such as Ethereum and Solana, and supports a broader array of distributed finance (DEFI) applications and use cases, helping native token holders get additional yields for spot market holdings.

“At the heart of it, it is considered a digital store of value,” Farrely told Koindsk. “Unlike more complex crypto projects, Bitcoin doesn’t require a deep technical explanation. It has a clear, focused purpose. Its clarity can be part of what makes it easier to model and assign ETFs.”

As a result, many purists resist the idea of ​​introducing defi-like characteristics directly into the Bitcoin blockchain, fearing diluting the core attraction of Bitcoin.

The topics around Bitcoin defi at the Bitlayer event and main Token2049 conference are specific, highlighting the increased demand for BTC holders for additional yield opportunities.

“Bitcoin debt with minimal trust-minimized bridges, and sustainable yield products for on-chain Bitcoin holders are becoming extremely important for Bitcoin asset holders and network maintainers,” Bitlayer co-founder Charlie Yechuan Hu told Coindesk.

“At Bitlayer, we are building a critical infrastructure that can use BitVM technology to strengthen Bitcoin debt,” added Hu. “Many interesting Bitcoin debt use cases can make Bitcoin assets more valuable and provide more reasons for users to keep and use in the future.”

This BTC Defi trend could also benefit miners who are rewarded for mining blocks. Although rewards per block are halved every four years, an increase in activity in the chain driven by the Defi application will help offset this reduction through higher transaction fees, supporting network security and sustainability.

“Certainly, Bitcoin Defi is also introducing new transaction fees, which are key components of the long-term sustainability and security of the network as block rewards continue to decline,” Farrelly said.

Hu expressed a similar opinion. He said the rise in network hashrates means miners, like Bitcoin Defi, need more activities to maintain profitability.

“We need to build a great Bitcoin rollup with security verification capabilities that can cause Bitcoin fees,” Hu pointed out.

Standard Chartered, OKX, and Franklin Templeton launched a pilot trading platform designed to enable institutional clients to use crypto and tokenized money market funds as collateral in off-exchange transactions, according to an April 10 release.

Franklin Templeton’s Digital Assets division will contribute tokenized on-chain assets, which OKX clients will be able to integrate into trading and risk management workflows. The structure is intended to meet institutional security, regulatory compliance, and liquidity standards.

Franklin Templeton’s head of digital assets, Roger Bayston, emphasized the importance of native blockchain integration. 

He added that minting assets on-chain enables true ownership and near-instantaneous settlement, removing reliance on traditional infrastructure and aligning operational speed with blockchain-based systems.

Brevan Howard onboarded

The framework is intended to allow institutions to mirror collateral held securely with a third party while maintaining operational flexibility for trading.

Brevan Howard Digital, a division of the global alternative investment manager Brevan Howard, is one of the first firms to participate in the pilot. 

Brevan Howard Digital’s chief administrative officer, Ryan Taylor, said that the program reflects the continued institutionalization of the digital asset sector and the increasing availability of compliant infrastructure for large-scale participation.

The program operates within the Dubai Virtual Asset Regulatory Authority (VARA) framework. It aims to provide capital efficiency and enhanced asset protection through custody arrangements with a globally systemically important bank (G-SIB).

Under the pilot structure, Standard Chartered will act as the independent custodian through its Dubai International Financial Centre (DIFC) entity, which the Dubai Financial Services Authority regulates. 

Meanwhile, OKX, operating through its VARA-regulated entity, will manage the collateral and facilitate transaction execution. 

Addressing institutional demand

According to Margaret Harwood-Jones, global head of financing and securities services at Standard Chartered, the initiative leverages the bank’s established custody infrastructure to provide a secure mechanism for holding digital collateral. 

She added that the collaboration addresses institutional demand for trusted digital asset custody and supports the safe use of blockchain-based products in trading environments.

OKX President Hong Fang said the program is a framework for deploying trading capital in a secure, capital-efficient manner. Fand noted that OKX’s infrastructure, combined with Standard Chartered’s custody services, creates a regulatory-grade environment suitable for institutional participants.

The initiative seeks to facilitate the broader adoption of tokenized instruments in institutional trading by enabling institutions to post digital assets as collateral while maintaining regulatory safeguards and custodial segregation.

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