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In 2024, institutions began to seriously incorporate Bitcoin into their portfolios. Headlines were dominated by Bitcoin treasury allocation announcements as pension funds, endowments, and companies took steps to store their Bitcoin. However, while this change was important, it was only the first layer of institutional implementation.
2025 is shaping up to be the year when financial institutions move beyond simply holding Bitcoin as a reserve asset and begin to embrace a new generation of financial products built around Bitcoin. These products offer new ways for investors to gain exposure to Bitcoin while addressing key institutional concerns such as jurisdictional risk, regulatory compliance, and tax efficiency. The era of Bitcoin-native financial engineering has arrived, poised to fundamentally reshape traditional finance.
complete bitcoin storage
One of the most innovative developments in Bitcoin storage is the concept of “multi-jurisdictional quorum.” This is a distributed storage arrangement where private keys are held across multiple regulated organizations in different jurisdictions. This model is attractive because it provides a hedge against jurisdictional overreach and regulatory capture, and Bitcoin technology is essential to making it work.
A typical multi-signature (“multisig”) wallet requires a quorum of private keys to approve transactions. For example, a “2 of 3” setup requires any two of three keys to sign off a transaction. If you hold these keys in different jurisdictions, avoid jurisdictional risk by ensuring that these keys are stored across multiple countries, often with different legal frameworks. You will have to do so.
This is important because in an increasingly global and politicized financial system, individuals and institutions face the risk of a single government freezing or seizing assets held within its borders. By distributing the keys to a Bitcoin vault across multiple jurisdictions, institutions can protect themselves from these risks and have the power to unilaterally block access to Bitcoin held by a single organization. You can avoid having it. Companies like Onramp are pioneering this approach, partnering with SOC2-compliant custodians in different regions to build resilient and fault-tolerant custody frameworks.
Bitcoin ETP: Institutional Gateway
It’s safe to say there was a lot of earth-shaking news regarding Bitcoin in 2024, from presidential speeches to rapid price increases. However, in retrospect, what may be seen as a turning point was the arrival of Bitcoin Exchange Traded Products (ETPs).
ETPs have been a major driver of Bitcoin adoption by institutions. According to Fidelity Digital Assets, Spot Bitcoin ETPs’ total assets under management (AUM) reached $114 billion by the end of 2024. This is an incredible achievement for a product category that has existed for less than a year.
To put this in perspective, Bitcoin ETPs have captured 80% of gold ETF assets under management in just 10 months. This feat highlights the pent-up demand for institutional-level access to Bitcoin. These products allow institutions to directly utilize Bitcoin without any administrative complexity. It also opens the door to more sophisticated investment strategies, such as cash-and-carry trading, which takes advantage of price differences between spot and futures markets.
The introduction of Bitcoin ETP options further expands its utility, allowing institutional investors to express nuanced opinions on Bitcoin through traditional exchanges. With over 1,000 participating companies including hedge funds, pension funds, and banks, the ETP market is rapidly maturing. Bitcoin ETP AUM is expected to increase further in 2025 as larger institutions with stricter oversight start allocating.
Resurrection of Bitcoin trust
While much of the talk about Bitcoin financial products focuses on ETPs, a quieter but equally important trend is emerging: the rise of Bitcoin trusts that offer physical delivery and tax-efficient structures.
Unlike spot Bitcoin ETFs, which require stocks to be sold for cash, Bitcoin trusts can facilitate the direct transfer of Bitcoin to investors. Onramp, previously mentioned with its multi-jurisdictional approach, is also working to breathe new life into Bitcoin trusts. This new generation of products differs from ETPs because they eliminate the need to sell and buy back 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.
The Rise of Bitcoin Bonds
For businesses and governments, Bitcoin bonds offer a new way to leverage the asset’s unique properties while reducing volatility. Companies hesitant to adopt Bitcoin as a reserve asset often cite price volatility as a barrier. Bitcoin bonds address this concern by allowing companies to maintain price exposure while generating cash flow and liquidity.
In this model, Bitcoin acts as collateral for bonds issued by companies and 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. Lenders benefit from principal protection bonds, which ensure that their capital is returned regardless of Bitcoin price fluctuations.
Lenders’ yields would then be linked to Bitcoin’s performance. If the price of Bitcoin doubles over the term of the bond, the lender could make a large profit. Even if prices are flat, this structure still offers competitive yields. This creates a virtuous cycle in which increased demand for Bitcoin bonds increases Bitcoin adoption, further increasing its price and utility.
Bitcoin as loan collateral
The traditional mortgage market has long been constrained by high fixed interest rates and strict eligibility criteria. But Bitcoin-backed mortgages are disrupting this model. Imagine a 30-year fixed-rate mortgage backed by Bitcoin collateral that offers an interest rate of 4% compared to the industry standard of 8%.
The innovation lies in Bitcoin’s predictable scarcity, four-year halving cycle, and historic price increases. In this model, as the price of Bitcoin collateral increases, borrowers can reduce their debt by paying down their mortgage or using the increase in collateral price to offset their outstanding balance. This self-paying mortgage concept is innovative, allowing individuals to hold Bitcoin without triggering a taxable event while using its value to secure homeownership.
Even if a liquidation occurs, the borrower does not lose everything. When the Bitcoin is sold, the mortgage is liquidated and the borrower is left with a fully paid-off home. This dynamic turns Bitcoin into a dual-purpose asset that protects both wealth and real estate.
Integrating Bitcoin and traditional finance
The rapid development of Bitcoin financial products is forcing traditional financial institutions to evolve. Asset managers, brokerages, and banks that once ignored Bitcoin as a fringe asset are now actively building infrastructure to support it.
Companies such as Morgan Stanley’s ETrade have already taken steps to integrate direct Bitcoin trading into their platforms, and retail brokerage clients will soon have seamless access to Bitcoin alongside stocks and ETFs. This suggests that it may become possible.
Meanwhile, new financial products designed specifically for digital assets emerge, including bespoke actively managed Bitcoin funds, as traditional asset managers seek to capitalize on growing demand for exposure to Bitcoin’s asymmetric upside. It is being done.
Rather than treating Bitcoin as a speculative outlier, financial institutions are increasingly viewing it as a core asset in their portfolios, akin to gold in the 1970s or tech stocks in the 2000s. New financial products enabled by Bitcoin’s unique properties are accelerating this change, making a compelling case for financial institutions to integrate Bitcoin into their treasury strategies.
