Yasuda on Tokenization

In a significant shift toward deeper integration with traditional finance, major cryptocurrency firms—including Circle, BitGo, Coinbase, and Paxos—are actively seeking U.S. banking licenses while also pursuing partnerships with existing banks and financial services companies. This dual strategy aims to position them as both direct service providers and collaborators within the established financial ecosystem. The efforts coincide with a more favorable regulatory environment, as federal agencies like the Federal Reserve, FDIC, and OCC have rolled back earlier restrictions requiring special approval for crypto activities. Notably, most of these firms operate primarily on permissionless blockchains—decentralized networks where anyone can transact without needing prior approval—posing unique regulatory and operational challenges as they attempt to align with tightly regulated banking standards.

This evolving regulatory backdrop is further supported by legislative momentum in Congress, where bills such as the STABLE Act and GENIUS Act are gaining attention. These proposed laws would create a clearer, structured framework for stablecoin issuance, potentially mandating that issuers either obtain banking licenses or work closely with chartered institutions. Anticipating these developments, crypto firms are hedging their bets: while pursuing their own licenses, they are simultaneously establishing partnerships with banks to navigate compliance complexities and gain faster market access. For instance, BitGo is preparing to submit its application for a federal bank charter while also engaging in talks with mid-sized banks about joint initiatives, particularly for safeguarding stablecoin reserves, including for the Trump-backed USD1 stablecoin.

Nonetheless, the path to full integration remains challenging, especially given the decentralized nature of permissionless blockchains, which contrasts sharply with the centralized risk management frameworks traditional banks must uphold. Securing a bank charter demands strict adherence to regulatory standards, including rigorous anti-money laundering (AML) and know-your-customer (KYC) compliance protocols—areas that can be difficult to reconcile with the open-access philosophy of public blockchains. Anchorage Digital, currently the only crypto-native firm with a federal bank charter, has reportedly invested tens of millions of dollars to meet these requirements. By combining licensing efforts with strategic partnerships, crypto firms aim to manage these tensions, access broader customer bases, and enhance their credibility. Their twin-track approach—seeking both independence through charters and strength through collaboration—signals a maturing industry seeking to embed itself firmly within the U.S. financial system while still preserving the ethos of blockchain innovation.

The three investment vehicles — Bitcoin ETFs, Twenty One Capital, and MicroStrategy — offer distinct pathways to gain Bitcoin exposure, tailored to different investor profiles and risk appetites. Bitcoin ETFs such as BlackRock’s IBIT provide a pure, regulated exposure to Bitcoin’s price, backed 1:1 with BTC holdings and low volatility relative to other options. These are ideal for institutional and conservative investors looking for clean, compliant exposure without operational risk. Expected 5-year CAGR is in the range of 20–25%, with annualized volatility around 60–70%, largely tracking BTC’s price movements.

Twenty One Capital, formed via a SPAC and backed by SoftBank, Tether, and Bitfinex, positions itself as a Bitcoin-native holding company that blends crypto-native strategy with Wall Street infrastructure. With ~42,000 BTC at launch and the potential to raise capital via debt and PIPEs, 21C offers asymmetric upside due to active management and potential expansion into lending and DeFi. It’s suited for risk-tolerant, growth-focused investors and carries higher volatility (80–100%) and an expected return in the 30–40% CAGR range, assuming successful capital deployment and BTC appreciation.

In recent years, sovereign wealth funds (SWFs) have started to recognize Bitcoin as a viable asset class, exploring both direct and indirect investment strategies. Bhutan’s Druk Holding & Investments stands out with a bold direct investment of approximately $1.02 billion in Bitcoin, supported by its national hydropower for mining operations. The United Arab Emirates’ Mubadala Investment Company followed suit with a direct allocation of around $437 million in the iShares Bitcoin Trust ETF, signaling rising institutional confidence. Norway’s Norges Bank Investment Management, while more conservative, holds indirect exposure through shares in crypto-focused companies like MicroStrategy and Tesla, with an estimated $356 million worth of Bitcoin exposure.

Pension funds have also begun to cautiously integrate Bitcoin into their portfolios, driven by the desire to diversify and tap into high-growth asset classes. U.S. pension plans lead the charge—Wisconsin’s Investment Board invested over $160 million across Bitcoin ETFs, while Michigan’s state pension system allocated $6.6 million. Several others, including CalSTRS, CalPERS, and Florida’s State Board, have opted for indirect exposure via shares in MicroStrategy, whose Bitcoin holdings offer a proxy investment. A notable first also emerged in the UK, where a £50 million pension scheme made a direct Bitcoin allocation—an unprecedented move in the British pension landscape.

On a broader scale, this growing institutional appetite reflects Bitcoin’s shifting perception from speculative asset to a potential portfolio hedge or long-term store of value. Some, like Japan’s GPIF, are still in the exploration phase, assessing the suitability of Bitcoin as part of a diversified investment mix. Meanwhile, the U.S. has formalized its Bitcoin holdings through the Strategic Bitcoin Reserve, accumulating over 200,000 BTC—partly through asset forfeitures. As traditional finance structures gradually warm up to digital assets, the line between conventional investing and crypto adoption continues to blur.

Bhutan has quietly emerged as a major holder of Bitcoin, leveraging its abundant hydroelectric power to mine the cryptocurrency since 2019. Through its sovereign investment arm, Druk Holding & Investments (DHI), Bhutan began accumulating Bitcoin when prices were comparatively low, and by late 2024, its holdings exceeded 13,000 BTC—valued at over $750 million. This makes Bhutan one of the top five sovereign Bitcoin holders, surpassing nations like El Salvador despite having a GDP of just $3 billion.

Bhutan’s Bitcoin strategy aligns with its broader economic goals: diversifying revenue, supporting digital transformation, and addressing unemployment among its youth. Rather than treating crypto as a speculative gamble, Bhutan integrates it into a long-term economic strategy grounded in sustainability and national resilience. This quiet but calculated accumulation signals a new paradigm in how resource-rich but capital-constrained countries can tap into digital assets to bolster their financial independence.