In 2024, institutions will begin integrating bitcoin into their portfolios. Headlines have been governed by announcements of Bitcoin cash allocations, as pension funds, endowments and companies have taken steps to keep Bitcoin in their custody. But as important as this update is, it only represents the first point of institutional adoption.
The year 2025 is shaping up to be the year institutions move beyond holding bitcoin as a simple reserve asset and begin embracing a new generation of financial products built around bitcoin. These products offer novel ways for investors to gain exposure to bitcoin while addressing key institutional concerns like jurisdictional risk, regulatory compliance, and tax efficiency. The era of bitcoin-native financial engineering is here, and it’s poised to reshape traditional finance in profound ways.
One of the most cutting-edge developments in Bitcoin custody is the concept of “multi-jurisdictional quorum”: distributed custody arrangements in which personal keys are held by regulated entities in other jurisdictions. This style is desirable because it provides coverage against jurisdictional excesses and regulatory capture and Bitcoin generation is imperative for it to work.
In a typical multi-signature (“multi-sig”) wallet, a quorum of private keys is required to authorize a transaction. For example, a “2 of 3” setup requires any two keys out of three to sign off on a transaction. If you hold these keys in different jurisdictions, you are hedging jurisdictional risk by ensuring that these keys are stored across multiple countries, often with different legal frameworks.
This is important because, in an increasingly globalized and politicized financial system, individuals and institutions face the risk that a single government could freeze or seize assets held within its borders. By distributing the keys to a bitcoin vault across multiple jurisdictions, institutions can insulate themselves from these risks and ensure that no single entity has the power to unilaterally block access to their bitcoin holdings. Firms like Onramp have pioneered this approach, partnering with SOC2-compliant custodians across different regions to create a resilient, fault-tolerant custody framework.
It would be safe to say that there was a lot of earth-shaking news about bitcoin in 2024 – from presidential talking points to rapid price appreciation. But it may be the arrival of bitcoin exchange-trade products (ETPs) that will be considered a watershed moment in retrospect.
ETPs play a key role in the institutional adoption of bitcoin. According to Fidelity Digital Assets, total assets under control (AUM) for spot bitcoin ETPs reached $114 billion through the end of 2024, an astonishing achievement for a product category that has been around for less than a year.
To put this into perspective, bitcoin ETPs captured 80% of gold ETF AUM in just 10 months, a feat that underscores the pent-up demand for institutional-grade access to bitcoin. These products allow institutions to gain direct exposure to bitcoin without the operational complexities of custody. They also open the door to more sophisticated investment strategies, such as the cash-and-carry trade, which exploits price differences between spot and futures markets.
The introduction of options on bitcoin ETPs has further expanded their utility, enabling institutional investors to express nuanced views on bitcoin through traditional exchanges. With over 1,000 entities participating, including hedge funds, pension funds, and banks, the ETP market is rapidly maturing. As larger institutions with stricter oversight begin to allocate, the AUM for bitcoin ETPs is expected to grow even further in 2025.
While much of the buzz around Bitcoin monetary products has focused on ETPs, a more discreet but equally significant trend has emerged: that of Bitcoin trusts offering in-kind deliveries and tax-efficient structures.
Unlike spot bitcoin ETFs, which require that shares be sold for cash, bitcoin trusts can facilitate the direct transfer of bitcoin to investors. Onramp, mentioned above for its multi-jurisdictional approach, is also working to breathe new life into bitcoin trusts. This new generation of product is different from ETPs because it eliminates the need to sell and repurchase bitcoin, avoiding taxable events in the process. Trust structures are particularly attractive to institutions that want the benefits of holding physical bitcoin without the complexities of direct custody.
For businesses and governments alike, bitcoin bonds offer a new way to capitalize on the asset’s unique properties while mitigating its volatility. Companies hesitant to adopt bitcoin as a reserve asset often cite price fluctuations as a barrier. Bitcoin bonds eliminate this concern by allowing businesses to maintain price exposure while generating cash flow and liquidity.
In this model, bitcoin serves as collateral for bonds issued by businesses or governments. For example, a government could collect bitcoin through tariffs – imagine $6 billion in bitcoin revenue each month – and issue bitcoin-backed bonds to raise $30 billion in funding. Lenders would benefit from principle-protected notes, ensuring their capital is returned regardless of bitcoin’s price movements.
The yield for lenders would then be tied to bitcoin’s performance. If bitcoin’s price doubles over the bond’s term, lenders would receive a significant return. Even if the price remains flat, the structure still delivers competitive yields. This creates a virtuous cycle where higher demand for bitcoin bonds drives greater bitcoin adoption, further bolstering its price and utility.
The classic loan market has long been limited by constant maximum interest rates and inflexible popular ratings. But Bitcoin-backed loans are set to disrupt this model. Imagine a 30-year constant rate loan secured through Bitcoin collateral, providing a 4% interest rate. to the popular industry of 8%.
The innovation lies in Bitcoin’s predictable scarcity, four-year halving cycles, and age-old price appreciation. In this model, as the value of Bitcoin’s collateral increases, borrowers can simply reduce their debt, either by paying off the loan or by employing the emerging value of the collateral to offset notable balances. This concept of a self-repaying loan is revolutionary and allows Americans to hold on to their bitcoins without incurring taxable fees while using their cost to protect homeownership.
Even in the event of liquidation, borrowers would lose everything. The bitcoin sold would void the mortgage, leaving the borrower with a house fully paid off. This dynamic transforms bitcoin into a dual-use asset: one that promises wealth and real estate.
Integrating Bitcoin with Traditional Finance
The immediate progression of Bitcoin monetary products is forcing classic monetary establishments to evolve. Asset managers, brokerages and banks that once viewed Bitcoin as a fringe asset are now actively building infrastructure for it.
Firms like Morgan Stanley’s E-Trade have already taken steps to integrate direct bitcoin trading into their platforms, signaling that retail brokerage clients will soon have seamless access to bitcoin alongside stocks and ETFs.
Meanwhile, new monetary products designed in particular for virtual assets, such as the actively controlled and personalized Bitcoin budget, are emerging as classic asset managers seek to capitalize on the growing demand for exposure to Bitcoin’s asymmetric benefits.
Rather than viewing bitcoin as a speculative outlier, institutions view it as a core asset in their portfolio, like gold in the 1970s or generation stocks in the 2000s. New monetary products enabled by Bitcoin’s unique features are accelerating this change, encouraging establishments to integrate Bitcoin into their monetary strategies.
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