Institutions have finally entered the crypto sector, but they are not here to rescue the market. They aim to turn the crypto economy into a fee-earning engine that expands their asset management scale. This analysis is not a judgment but a plain observation of the incentives behind institutional participation in crypto. USDT and USDC alone generate roughly $10 billion in annual net interest margins, with profits accruing to Tether, Coinbase, and Circle.
The involvement of Cantor Fitzgerald in managing treasuries for Tether and brokering deals for digital-asset firms shows how traditional finance monetizes crypto flows. The rapid rise of the IBIT Bitcoin ETF illustrates a replicable blueprint: packaging crypto into traditional funds, listing them, and turning them into a steady stream of fees. In just over a year, IBIT amassed about $70 billion in AUM, with growth roughly five times that of the GLD gold ETF; by late 2024, IBIT options added more than $30 billion in funds, and the product accounts for roughly half of the Bitcoin ETF market. IBIT is BlackRock’s most lucrative ETF, with about $100 billion in AUM and billions in annual fees, outpacing the revenue of the firm’s flagship S&P 500 ETF.
On-chain capital has become the next battleground for AUM. Stablecoins total roughly $300 billion in issuance, with USDT around 60% and USDC around 25%. Multi-chain DeFi TVL sits around $90–100 billion. Tokenized money funds, tokenized gold, and consumer-loan products expand on-chain real assets, adding hundreds of billions more. Yet on-chain yields average only about 2–4%, far below traditional money market yields of around 4.1%; even the Lido stETH pool yields roughly 2.3%. In the eyes of asset-accumulation optimizers, this isn’t DeFi lock-up; it’s cash flow not yet fully monetized— ready to be packaged, pledged, lent again, and charged for. Tokenization and compliant wrappers convert crypto capital into fee-bearing AUM within familiar custody frameworks.
When enterprises, DAOs, and protocols accumulate large crypto treasuries seeking safer external yields, asset managers can repackage those assets into token funds, money funds, or structured products. The only path out is to quickly build and scale native crypto institutions—on-chain asset management, risk underwriting, native financial products, and crypto-native governance entities—that keep value on chain. If native crypto institutions are not prioritized, institutional adoption could become consolidation rather than victory.
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