Key Takeaways

• Integration of traditional and digital finance: Institutions like BNY are deeply integrating digital assets into their traditional finance stack. This unlocks new utility, like using digital assets as collateral in a more broadly integrated financial system.
• Bitcoin ETFs as retail access points: ETFs serve as an accessible bridge for retail investors, but institutions have not yet allocated significant capital to this asset.
• Maturing service provider ecosystem: The digital asset landscape has developed significantly, enabling more secure custody, on-chain auditing, and reporting.
• Asset management convergence: Investment products are converging between traditional finance and on-chain, but it is likely a decades-long process as the regulatory frameworks and tax wrappers have to be rebuilt.

Panelists

• Caroline Butler, Global Head of Digital Assets - BNY
• Teddy Fusaro, President - Bitwise
• Jean-Marie Mognetti, CEO - Coinshares
• Adam Sporn, Head of Prime Brokerage - BitGo
• Antoine Scalia, CEO - Cryptio

The panelists discussed the state of institutional crypto asset management, starting with ETFs and where we are in the adoption cycle. They then looked at how new infrastructure will support the convergence of TradFi and on-chain assets.

ETFs: Bridging retail demand and institutional adoption

Bitcoin ETFs have experienced a breakthrough in the digital asset space, providing a familiar and regulated investment vehicle for retail investors. However, innovation often progresses slowly, or “one funeral at a time,” as Jean-Marie put it.

Although ETFs offer an accessible entry point for retail investors institutional adoption is also critical, and the industry is still navigating this phase. For example, while major institutional financial advisors (IFAs) and media, like Barron’s, have shown allocation interest, client portfolios do not yet reflect this enthusiasm.

The ETF Wrapper and Legal Infrastructure

One of the crucial advantages of Bitcoin ETFs is their regulated and tax-efficient structure. However, new technologies require an extensive reworking of regulatory and legal frameworks. The panel acknowledged that while the ETF wrapper provides clients with a familiar structure, transitioning to a purely on-chain asset management model involves overcoming regulatory and legal hurdles.

BNY's digital asset journey 

BNY, a 240-year-old institution with more than $50 trillion in assets under custody, has been a leader in integrating digital assets and traditional finance. Caroline highlighted that BNY began its journey with custody. For a company historically centered around ledger services, this was a natural extension.  BNY looks to integrates digital assets with traditional custody and collateral management, providing value beyond disintermediation – BNY sees blockchain technology as enhancing asset utility rather than merely removing intermediaries.

Is the future of asset management on-chain?

With respect to ETFs, Teddy addressed a common and legitimate question: “Isn’t it like taking an asset I can buy on-chain and going backward in time by going off-chain?” It is a bit like that, he said, but he explained that the two systems will converge over time. This captured the essence of the panel’s view of the importance of remaining forward-looking and focused on technology.

The panelists discussed the convergence of traditional and digital finance and the ongoing shift to on-chain asset management, emphasizing that while the journey started with Bitcoin, other assets will follow. They also noted that as the industry evolves, integrating securities and cash into blockchain technology will help merge financial systems that have traditionally been separate.

Regarding the ETFs, Teddy addressed the common and legitimate remark “Isn’t it like taking an asset I can buy on-chain and going backward in time by going off-chain?”. He said that it is in fact going backwards, but explained that both systems will emerge and converge over a long period. This captured the essence of the panel's view on the importance of keeping innovation forward-looking and technology-focused.

The panelists discussed convergence of traditional and digital finance. The ongoing shift towards on-chain asset management, emphasizing that while the journey starts with Bitcoin, other assets will follow. They also noted that as the industry evolves, integrating securities and cash into blockchain technology will help merge traditionally separate financial systems.

Service provider landscape has matured - in all respects

Custody has long been a significant challenge in the digital asset space. In the early days, audit firms hesitated to sign off on balance sheets due to the unregulated and unclear landscape around digital assets, creating barriers for asset managers. The panelists noted how this went beyond custody to include issues with auditors, financial reporting and fund administration.