Bitcoin Becomes Standard for Listed Companies, Banking Industry Accelerates Embrace of Crypto Assets

Just 10 days after Tesla invested $1.5 billion to purchase Bitcoin, the floating profit reached $800 million, surpassing its profits from over a decade of car manufacturing. This move, along with other institutions' positive attitudes, directly pushed the market value of Bitcoin to over a trillion dollars.

At the same time, MicroStrategy raised $1.05 billion through convertible bonds to continue purchasing Bitcoin. The company has accumulated over 70,000 Bitcoins since last year.

This enthusiasm reflects Bitcoin's "safe haven" status in the era of global monetary easing, and highlights the increasingly open attitude of traditional institutions towards Crypto Assets. This undoubtedly lays the foundation for the widespread acceptance of Crypto Assets in the future.

Let's take a look at the current progress of the banking industry and major listed companies in the encryption field, which provides confidence support for observers to enter on a large scale.

Banking Industry and Crypto Enterprises: Bilateral Openness, Accelerating Integration

One of the main concerns of regulators regarding the crypto market is the lack of reliable custody solutions, which is also a core factor hindering public companies from allocating crypto assets. However, this situation changed significantly in 2020.

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

The United States' strong position in the Crypto Assets banking industry is not only due to its long-term continuous exploration of the encryption industry 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 facilitated the rapid integration of crypto-native enterprises and banks.

For example, the payment charter launched by the OCC allows some crypto-native enterprises to upgrade their state trust company licenses to national trust bank licenses. The OCC has also paved the way for direct custody of crypto assets by U.S. banks, even allowing banks in the future to use public chains and crypto dollar stablecoins as infrastructure for payment, clearing, and settlement.

Multiple banking giants have entered the market or expressed a positive attitude. Currently, a large bank has provided banking services to several licensed exchanges in the U.S. A senior executive from that bank recently stated that they will eventually have to launch Bitcoin services.

One of the world's largest custodial banks announced that it will launch a new digital asset custody division in 2021 to help users trade digital assets, including Crypto Assets.

Switzerland is another crypto-friendly banking hub worth noting. In 2019, the Swiss Financial Market Supervisory Authority (FINMA) opened applications for banking licenses to qualified crypto enterprises and allowed traditional banking institutions to participate. In the same year, FINMA approved several of the country's large traditional banks to conduct crypto asset custody business and granted some banking licenses based on crypto asset operations.

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

Bitcoin Becomes Standard for Listed Companies, Institutions Enter the Market

The continuous development of traditional large banks and crypto banks has provided a foundation for enterprises to enter the market, while many listed companies allocating Bitcoin has provided more support for this trend.

According to statistics, currently 19 North American/European listed companies have allocated Bitcoin. In addition, there are some "pseudo-ETFs" that manage a large amount of Bitcoin. The total number 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 the operations of a large crypto assets fund experienced rapid growth in 2020, with assets under management (AUM) increasing nearly 50 times, reaching $43.626 billion as of February 20.

The market expects that more competitors of this kind of fund will emerge in 2021. There is also a significant possibility that the long-unapproved Bitcoin ETFs in the United States will be launched this year, and they may offer more competitive management fee rates.

For example, the annual management fee rate of a new Bitcoin trust fund launched by a certain company is only 1.75%, lower than that of a well-known fund. Recently, two Bitcoin ETFs have started trading in Canada, one of which had a trading volume of $165 million on its first day, attracting the attention of investors including those from China.

For listed institutions, they will have richer tools and channels for configuring and arbitraging Bitcoin. Buying Bitcoin through a fully compliant securities market may become a more prudent choice for listed institutions.