Institutional investors flood into the crypto market, Bitcoin value gains widespread recognition

Recently, Tesla invested $1.5 billion in Bitcoin and realized a floating profit of $800 million in just 10 days, a figure that even surpasses the company's automotive business profits over the years. Meanwhile, MicroStrategy has raised $1.05 billion again through convertible bonds to continue increasing its Bitcoin holdings. The company has accumulated over 70,000 Bitcoins since last year.

This enthusiasm not only reflects institutional investors' recognition of Bitcoin as a hedge against inflation, but also demonstrates the traditional finance industry's increasingly open attitude towards encryption currencies. This undoubtedly paves the way for the widespread application of encryption currencies in the future.

Let's take a look at the latest developments of the banking industry and major listed companies in integrating into the encryption industry.

Banking Industry and Crypto Enterprises: Accelerating Bilateral Integration

In the past, a major concern for regulators regarding the crypto market was the lack of reliable custody solutions, which was also a key factor hindering public companies from allocating crypto assets. However, this situation underwent a significant change in 2020.

According to statistics, 35 banks have expressed friendliness towards the encryption industry and have engaged in substantive business cooperation with crypto-native enterprises. Among them, 11 are located in the United States, 10 in Switzerland, and the rest are mainly distributed across European financial centers such as 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 encryption banking industry is attributed to its long-term continuous exploration of the crypto industry, as well as a series of executive orders issued by the Office of the Comptroller of the Currency (OCC) last year. These policies have facilitated the rapid integration of crypto-native enterprises and traditional banks.

For example, the payment charter launched by the OCC allows some crypto-native enterprises to upgrade state trust company licenses to national trust bank licenses. At the same time, 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 crypto dollar stablecoins as the infrastructure for payment, clearing, and settlement in the future.

Against this backdrop, many banking giants have either entered the market or expressed a positive attitude. A well-known bank has already provided banking services for a licensed exchange in the United States. Another global custodian bank announced that it will launch a new digital currency custody division in 2021 to help users trade digital assets, including encryption currencies.

Switzerland is another crypto-friendly banking hub worth paying attention to. As early as 2019, the Swiss Financial Market Supervisory Authority (FINMA) opened the door for qualified crypto companies to apply for banking licenses and allowed traditional banking to participate. In the same year, several large traditional Swiss banks were authorized to conduct custody business for crypto assets.

In Asia, a large bank in Singapore has taken the lead in launching an integrated platform for the issuance, trading, and custody of digital assets, supporting exchange services between various cryptocurrencies and fiat currencies.

It has become a trend for listed companies to allocate Bitcoin.

The ongoing integration of traditional large banks and crypto banks provides a foundation for enterprise entry. Meanwhile, an increasing number of publicly listed companies are beginning to allocate Bitcoin, which further enhances market confidence.

According to statistics, 19 North American/European listed companies have currently allocated Bitcoin. In addition, there are some "quasi-ETF" funds managing a large amount of Bitcoin. The total amount of Bitcoin held by these two types of institutions reaches 948,720 coins, accounting for 4.747% of the total Bitcoin supply.

It is worth noting that a well-known cryptocurrency investment fund achieved astonishing growth in 2020, with its assets under management (AUM) increasing nearly 50 times. As of February 20, 2021, the fund's AUM reached 43.626 billion USD.

The market expects that more similar funds will appear in 2021, and there is a high possibility that the long-unapproved Bitcoin ETF in the United States will be launched this year. These new products may offer more competitive management fee rates.

For example, a newly launched Bitcoin trust fund has an annual management fee rate of only 1.75%, which is lower than that of a well-known fund. Recently, two Bitcoin ETFs have begun trading in Canada, one of which reached a trading volume of 165 million USD on its first day, attracting the attention of international investors, including those from China.

For listed companies, these new investment tools and channels undoubtedly provide more options for allocating and arbitraging Bitcoin. Purchasing Bitcoin through a fully compliant securities market may become a more prudent choice for listed institutions.