The overall market is sluggish, and the price of Bitcoin has fallen below the $100,000 mark. Despite the market experiencing a downward adjustment, institutions continue to adopt digital assets in their operations.
In the United States, a major digital trading platform and licensed bank has opened cryptocurrency trading to institutional clients. The derivatives department of the Singapore Exchange has also begun to venture into digital assets, launching cryptocurrency perpetual contract trading.
Policy changes have enabled some companies to offer cryptocurrency exchange-traded products (ETPs), further enriching the supply of institutional financial products related to cryptocurrencies.
This week, the market faced a significant setback, but institutions are looking long-term and continuously expanding their roles in the crypto industry.
Institutions providing Bitcoin-related products, as well as publicly listed and private companies incorporating Bitcoin into their balance sheets, have led to a total amount of Bitcoin held by enterprises accounting for 14% of the cryptocurrency's 21 million supply.
This figure does not include the significant shares held by Bitcoin mining companies, sovereign nations like El Salvador, and decentralized finance protocols.
The concentration of Bitcoin supply in the hands of a few companies is increasing, raising concerns about centralization. Crypto analyst Willy Woo stated that Bitcoin is following the same "nationalization path" as gold in the 1970s.
However, Nicolai Søndergaard, a research analyst at the crypto intelligence platform Nansen, previously told Cointelegraph that there is no need for concern.
"This will not change the fundamental properties of Bitcoin. Even if custody becomes more centralized, the network remains decentralized," he said.
Digital financial services company SoFi announced on November 11 that it will launch cryptocurrency trading services for U.S. retail customers.
CEO Anthony Noto stated that SoFi is the only national licensed bank offering cryptocurrency trading services. He pointed out that the company feels more confident in providing digital asset-related services following the updated policies from the Office of the Comptroller of the Currency (OCC) in the U.S.
"For the past two years, we have had a shortfall in the crypto space—being unable to buy, sell, and hold cryptocurrencies. As a bank, that was not allowed," he added.
However, in March of this year, the OCC relaxed policies related to banks and cryptocurrency businesses, stating, "National banks and federal savings associations can engage in activities including custody, certain stablecoin activities, and participation in distributed ledger networks as independent node verification networks."
The derivatives department of the Singapore Exchange (SGX) announced that it will launch perpetual contract trading services on November 17.
The exchange stated that this move stems from "growing institutional-level crypto demand and the integration of traditional finance with the native crypto ecosystem."
Bitcoin and Ethereum perpetual contracts on the new exchange will only be available to accredited and professional investors, officially launching on November 24 and regulated by the Monetary Authority of Singapore (MAS).
This is the second time Singapore has launched perpetual contracts. On July 23 of this year, EDXM International also launched perpetual contracts and 44 different products. Perpetual contracts allow investors to bet on asset prices without expiration or closing, and they can achieve high leverage, making them one of the most popular types of crypto derivatives trading globally.
The U.S. tax authority—the Internal Revenue Service (IRS)—has approved rules allowing staking-related digital asset ETPs to provide reward income for investors.
Specifically, the regulation allows "digital asset ETPs that hold a single digital asset like Ethereum to earn rewards through staking while maintaining the grantor trust tax classification."
Roger Wise from the law firm Willkie Farr & Gallagher pointed out that this grantor trust status is particularly important for simplifying ETP tax reporting.
Treasury Secretary Scott Bessent announced this move on November 10, stating that it will promote innovation and make the U.S. more competitive in the global crypto industry. "Digital asset ETPs avoid taxation at the entity level, providing retail investors with an attractive new tool, and the annual tax reporting process is as straightforward as that for ETFs or mutual funds."
This move brings more certainty to institutions looking to issue ETPs with staking features in response to growing investment demand.
The Hong Kong government has released a third batch of blockchain bonds. According to news on November 11, this round of bonds amounts to HKD 10 billion ($1,284,438).
These bonds will be denominated in Hong Kong dollars, Chinese yuan, U.S. dollars, and euros, and are reportedly well-received by institutional investors. The Hong Kong Monetary Authority stated:
"This issuance continues to attract subscriptions from a wide range of institutional investors globally, including asset management companies, banks, insurance companies, private banks, among which a significant number are new investors participating in digital bonds for the first time."
Despite the market being in a correction phase, institutions are actively positioning themselves for the future as new financial products based on blockchain technology and cryptocurrencies continue to emerge.
Related: Kraken secures $800 million in funding at a $20 billion valuation for expansion plans
Original article: “Despite the drop in Bitcoin (BTC) prices, institutions are still doubling down in the cryptocurrency space”
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