Institutional investors are increasingly handling Bitcoin as part of their business and exploring other digital asset opportunities, according to research from the industry association Global Digital Finance (GDF).
The study, which surveyed major finance firms across the US, Asia, Europe (including the UK) and the Middle East, found that almost all the respondents now handle Bitcoin in some capacity, including as part of ‘testing’ the digital asset sector. Additionally, around 86% of those not currently handling Bitcoin plan to do so in the future.
Financial institutions are predominantly handling Bitcoin as custodians, with 74% indicating they do so. Nearly 67% are involved through ETFs or ETPs, and 54% handle Bitcoin as part of client trading. Furthermore, around 31% engage with Bitcoin through brokerage services, while 16% act as proprietary traders.
The engagement with Bitcoin extends to other digital assets as well. Approximately 87% of the surveyed institutions handle Ethereum, and 83% manage other cryptocurrencies or tokens. The GDF, which focuses on accelerating digital finance through best practices, standards, and regulatory engagement, conducted the research.
Survey predicts strong inflows in Bitcoin ETF
In terms of trading, financial institutions dealing with Bitcoin and other cryptocurrencies are most likely to use derivatives, with 40% doing so. About 31% use spot trading and 39% use a combination of both methods. Additionally, 58% have deployed, used, or handled crypto derivatives, 45% have engaged with DeFi protocols such as Aave or Compound, and 25% have dealt with NFTs.
66% of the firms work with central crypto exchanges, while 61% collaborate with technical service providers and 57% with stablecoin providers. Other trading partners include custodians (47%), data service providers (46%), and market makers and liquidity providers (31%).
Elise Soucie, executive director, policy and regulation, and board member at GDF, stated: “This is the year of crypto going institutional, with our research showing most firms are handling Bitcoin in some shape or form, and that is also the case with other cryptocurrencies and tokens. The SEC’s decision to approve the listing and trading of spot Bitcoin ETPs has had a major influence, but even before then, momentum has been building, and the current strong performance of the digital assets market is adding to that.”
The findings highlight the growing acceptance and integration of digital assets within traditional financial institutions, signalling a significant shift towards the institutionalisation of cryptocurrency markets.
