The Crypto Assets market welcomes a large-scale get on board of institutional investors.

The recent astonishing surge of Bitcoin has attracted widespread attention. Just 10 days after an electric vehicle company invested $1.5 billion to purchase Bitcoin, the paper profit reached $800 million, surpassing the profits from the company's car manufacturing business over the years. This move, along with the entry of other institutional investors, directly propelled Bitcoin's market value to exceed the trillion-dollar mark.

At the same time, a software company raised $1.05 billion through convertible bonds to continue increasing its holdings of Bitcoin. The company has accumulated more than 70,000 Bitcoins since last year.

The enthusiasm of institutional investors to some extent reflects the recognition of Bitcoin's value as a hedge against inflation. In addition to actively buying institutions and wealthy individuals, traditional banks have also accelerated their embrace of Crypto Assets in the past two years, which will undoubtedly pave the way for the widespread acceptance of Crypto Assets.

Banking Industry and Crypto Enterprises: Bidirectional Opening, Accelerating Integration

For a long time, a major concern of regulators regarding the crypto market has been the lack of reliable custody solutions. Many institutions in the crypto industry have been unable to access full banking services, which has largely hindered publicly listed companies from allocating crypto assets. However, this situation changed dramatically in 2020.

According to statistics, there are currently 35 banks that have a friendly attitude towards the encryption industry and have established substantial business relationships with crypto-native enterprises. Among them, 11 are located in the United States, 10 in Switzerland, and the others are mainly distributed in financial centers in the United Kingdom, Germany, and Malta. The median asset size of these banks is $866 million, with 6 having total assets exceeding $2 billion.

The United States' leading position in the Crypto Assets banking industry is not only the result of long-term exploration but is also closely related to a series of executive orders issued by the Office of the Comptroller of the Currency (OCC) last year. These policies have accelerated the integration between Crypto Assets companies and traditional banks.

For example, the payment charter launched by the OCC allows some well-known Crypto Assets companies to upgrade their state trust licenses to national trust bank licenses, thereby obtaining broader business permissions. The OCC has also opened a channel for the U.S. banking industry to directly custody Crypto Assets, and even allows banks to use public chains and stablecoins as the infrastructure for payment, clearing, and settlement in the future.

Against this backdrop, some large tech payment companies have begun seeking to acquire Crypto Assets custody institutions, while leading Crypto Assets exchanges have also accelerated their listing processes. As of February 20, a well-known Crypto Assets exchange has reached a valuation of 100 billion dollars in the Nasdaq private equity market.

Many globally renowned banks have begun to venture into the encryption field or have expressed a positive attitude. A large investment bank is providing banking services for a licensed crypto exchange in the US, with executives stating that they may have to launch Bitcoin-related services in the future. One of the world's largest custodial banks has also announced that it will launch digital currency custody services in 2021 to help clients trade digital assets, including Crypto Assets.

Switzerland is another hub for crypto-friendly banks. As early as 2019, Swiss financial regulators allowed eligible crypto businesses to apply for banking licenses and approved several traditional large banks to conduct crypto assets custody services. At the same time, two banks focused on crypto asset businesses also obtained licenses.

In Asia, a large bank in Singapore has taken the lead in launching a platform that integrates digital asset issuance, trading, and custody, supporting the exchange between various mainstream Crypto Assets and fiat currencies.

Bitcoin is becoming a standard for listed companies.

As the integration between traditional banking and the encryption industry deepens, more and more listed companies are beginning to allocate Bitcoin. According to statistics, there are currently 19 listed companies in North America and Europe that hold Bitcoin, in addition to some large Crypto Assets investment funds playing an important role. These institutions collectively hold approximately 948,700 coins, accounting for 4.747% of the total supply.

It is worth noting that a well-known Crypto Assets investment fund experienced rapid growth in 2020, with assets under management (AUM) increasing nearly 50 times, reaching 43.626 billion USD as of February 20. The market expects more similar investment tools to emerge in 2021, and the long-delayed Bitcoin ETF in the US may also be launched this year, with these new products potentially adopting a more competitive fee structure.

For example, the recently launched Bitcoin trust fund has an annual management fee rate of only 1.75%, which is much lower than existing mainstream products. Canada has already seen two Bitcoin ETFs start trading, with the first ETF achieving a single-day trading volume of 165 million USD, attracting the attention of international investors, including those from China.

For listed companies, these compliant securitized products undoubtedly provide a safer and more diversified channel for Bitcoin allocation. With the continuous enrichment of institutional investment tools, we can expect more traditional financial institutions to join the ranks of Bitcoin investment.