Institutional involvement in the crypto market is rising as more people worldwide adopt digital assets as a financial instrument. Last year, this growth was represented by the United States’ approval of two crypto exchange-traded funds (ETFs) and Europe’s adoption of the MiCA framework.
Catherine Chen, Head of VIP at Binance, told BeInCrypto that she expects 2025 to continue driving investor interest. Chen expects other countries to follow suit as the crypto market anticipates more favorable conditions under Donald Trump as the US president.
The Number of Institutional Investors in Crypto Rises
The crypto market is undergoing a significant transformation, characterized by a notable increase in the involvement of institutional investors.
This influx of capital from institutional players is fundamentally reshaping the crypto market, transitioning it from one primarily driven by retail investors to one characterized by increased institutional dominance.
According to Chen, Binance, one of the largest crypto exchanges by trading volume, has witnessed this transformation.
“At a global level we are already seeing a very rapid growth of institutional investors entering this market. In 2024, almost every quarter, the number of registered institutional clients growth doubled. In the first quarter, we saw a 25% increase. In the second quarter, 50%. Right now we’re at almost 100% from the beginning of the year,” she said.
Last year proved to be emblematic of the progress of cryptocurrency adoption across the globe. Despite resistance, digital assets won battles on different fronts, from the approval of regulatory frameworks to crypto adoption within traditional business models.
ETFs Act as an Entry Point for Traditional Investors
In 2024, the approval of two crypto exchange-traded funds (ETFs) in the United States exposed traditional institutional investors to the opportunity to engage with digital assets without requiring them to own them directly.
Bitcoin (BTC) was the first to receive an ETF approval last January. The panorama was particularly complex under Gary Gensler, then-chairman of the US Securities and Exchange Commission (SEC). He built himself an adversarial reputation for his hardline approach to crypto regulation.
“The approval of the Bitcoin ETF was possibly the single most important event in 2024. It has a meaningful long-term effect because the ETF really gives the legitimacy the crypto asset class deserves. The introduction of ETFs show that most of the world’s biggest ETF issuers are all taking this asset class seriously.
The ETF is a vehicle, as an investment wrapper, that makes it very easily accessible to all types of investors. In addition to that, when I say that it will have a long term effect, it’s because the institutions that have been waiting on the sideline can finally enter the crypto market using an instrument they are used to,” Chen said.
In May, Ethereum (ETH) closely followed suit when the SEC greenlit spot Ethereum ETFs, which began trading two months later on exchanges like Nasdaq, the New York Stock Exchange, and the Chicago Board Options Exchange.
Global Year-over-Year Growth by Asset Type and Transfer Size. Source: Chainalysis.
The success of both of these digital assets in achieving ETF approval after years of trial and error saw substantial inflows and drove prices to record highs, sparking optimism among investors and market analysts.
“2024 has been successful beyond expectation, a sort of new era for crypto, with relevant developments in many areas, including the fact Bitcoin and the total crypto market cap reaching new ATHs, the US spot Bitcoin ETFs accumulated over $31 billion in net inflows and over $100 billion in assets under management (AUM). The spot Ether ETFs approved in July 2024 also attracted the attention of investors, with over $730 million in inflows and over $9 billion in AUM,” Chen told BeInCrypto.
Sentiment among industry players indicates that 2025 will see more ETF approvals for other cryptocurrencies.
The Debate Over Future ETF Approvals This Year
Several digital assets have already submitted new applications for spot ETFs. In November 2024, asset managers VanEck, 21Shares, and Canary Capital filed for a Solana (SOL) ETF with the SEC. Grayscale did the same one month later.
The SEC also received ETF applications from Litecoin (LTC), Hedera (HBAR), and Ripple (XRP).
“We are likely going to see more ETFs approved next year. This will bring in more institutional investors as crypto becomes a bigger part of the traditional market. We don’t share our targets, but for reference, the volume traded by institutional investors grew 60% in the 12 months through November, compared to the year earlier period. Globally, Binance saw 97% growth in the number of onboarded institutional investors this year,” Chen said.
Despite widespread optimism over approving more ETFs in the coming year, several factors need to be considered regarding this likelihood. In determining whether an ETF is fit for approval, the SEC requires the asset to meet strict regulatory standards.
These include compliance and adherence to existing financial regulations, sufficient market demand from institutional and retail investors, reliable custody solutions, high liquidity levels, and rigorous asset performance and governance transparency.
Bitcoin and Ethereum had a unique advantage when they applied for an ETF with the SEC. Both networks have a reputation beyond the borders of the cryptocurrency industry.
Unlike its competitors, networks like Solana, Litecoin, and Hedera do not have the same recognition, potentially weakening an overall market demand for an ETF among traditional investors.
Crypto Becomes Part of US Political Agenda
Since Satoshi Nakamoto created Bitcoin in 2009, cryptocurrencies have come a long way. For the better part of that trajectory, actors in traditional finance have regarded digital assets as a fad. Individuals with little knowledge of their utility associated them with scam risks or fraudulent activity.
In 2024, cryptocurrency became one of Donald Trump’s central pillars during his election campaign.
“Let’s recall crypto was a topic in the election agenda for both US candidates. This is already very important. With pro-crypto president-elect Donald Trump and a number of pro-crypto politicians across the Senate and House of Representatives elected, we are likely going to see new developments in crypto legislation in 2025,” Chen recalled.
Throughout his campaign trail, Trump referred to himself as a “crypto president.” Since his victory in the November elections, he has made several appointments that have sparked widespread approval across the crypto sector.
In early December, Trump named David Sacks the White House’s “crypto czar.” A seasoned entrepreneur and investor with over two decades of experience in Silicon Valley, Sacks is expected to bring extensive experience to this role.
Trump also picked Paul Atkins, a cryptocurrency advocate, to replace Gary Gensler as Chair of the Securities and Exchange Commission (SEC). Crypto advocates celebrated the move, while the market reacted with immediate gains.
Trump appointed Stephen Miran, a former Treasury official during his first administration, to lead the Council of Economic Advisors (CEA). Miran, a vocal advocate for cryptocurrency, has previously called for regulatory reforms in the United States.
“Any regulation developments in the US should encourage more crypto participation across the market and will help increase the awareness of crypto for other countries across the world,” Chen said.
This shift in government policy towards a more supportive stance on digital assets could also have a domino effect on other nations.
Adoption Extends Beyond Financial Giants
Institutional interest in cryptocurrency rose among major financial players and companies limited to the retail sector.
“Financial giants like BlackRock and Fidelity entered the crypto business in 2024, and we expect to see more new players coming to crypto in the years ahead,” Chen said to that point.
In March, BlackRock, the world’s largest asset provider, unveiled the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), its first tokenized fund issued on a public blockchain. This provided qualified investors the opportunity to earn US dollar yields. Through Securitize Markets, LLC, investors gained access to this novel fund, heralding a shift in investment dynamics.
Coinbase became a key infrastructure provider for BlackRock’s novel blockchain fund. This collaboration marked a significant milestone in integrating traditional finance with blockchain technology, particularly through the launch of BUIDL.
In another display by traditional financial institutions, Fidelity International followed in BlackRock’s footsteps in June when it announced that it had joined JPMorgan’s Tokenized Collateral Network (TCN).
The move positioned Fidelity alongside other major players in the tokenization sector, while the collaboration with JPMorgan highlighted the increasing interest in leveraging blockchain for real-world applications.
This increased adoption extends beyond financial giants.
“More companies are learning about crypto and integrating crypto features into their business. We believe this is a trend that has grown for years and we expect to see more development in,” said Chen.
Several high-fashion and luxury retailers exemplify how crypto adoption is steadily rising. Renowned brands like Ferrari, Gucci, Balenciaga, and Farfetch have all broadened their payment systems to accept crypto.
Global Crypto Adoption
Crypto adoption among institutional investors extends well beyond the United States. As more individuals start to use digital assets as a form of currency, different nations have started to regulate this development.
“About one-third of countries around the world have announced and put in place some sort of regulatory framework for crypto as an asset class or for VASPs, at different levels and approaches. Some countries like Dubai have an advanced framework of licenses, registrations and reporting. Japan, El Salvador and various European countries too, to cite a few. The regulatory debate is advancing faster,and becoming a topic in the political agenda, which definitely sets an optimistic precedent for the industry when we look into the future,” Chen told BeInCrypto.
Economic powerhouses and nations with emerging economies alike have taken these initiatives.
“Some countries like Dubai have an advanced framework of licenses, registrations and reporting. Japan, El Salvador and various European countries too, to cite a few. The regulatory debate is advancing faster,and becoming a topic in the political agenda, which definitely sets an optimistic precedent for the industry when we look into the future,” Chen added.
The list continues, spanning every continent. Some countries are even considering adopting crypto as a reserve asset. Last week, Bhutan’s Gelephu Mindfulness City announced that it had incorporated digital assets like Bitcoin, Ethereum, and BNB into its strategic reserves.
Earlier this month, the governor of the Czech National Bank, Aleš Michl, expressed interest in Bitcoin as a potential addition to the country’s foreign exchange reserves.
Switzerland is also contemplating holding Bitcoin as a strategic reserve, further highlighting the increasing role of cryptocurrencies in financial innovation.
Similarly, Bitcoin reserves are gaining momentum in the United States, with 13 states leading in 2025.
“Let’s not forget there’s a debate about a potential Strategic Bitcoin Reserve in the US. If that moves forward and comes true, we will likely see many other countries following this path. This will definitely impact adoption,” Chen said on the topic.
The growing global adoption of cryptocurrencies and their potential use as reserve assets suggests a promising future for their role in the greater financial sector.
Europe Sets Precedent on Crypto Regulatory Framework
In 2024, Europe established a particular global precedent regarding regulatory clarity.
“On the regulatory front, we’ve seen developments around the world, notably MiCA in Europe, but also in other countries,” said Chen.
Two days before ringing in the New Year, the European Union passed the Markets in Crypto-Assets (MiCA) framework, which provides unified crypto regulations for all adhered nations.
Unlike the United States, which has generated an atmosphere of regulatory uncertainty in the past few years, the EU’s approval of MiCA eliminates the ambiguity associated with differing regulatory requirements.
MiCA also enhances consumer protection by ensuring that all crypto asset issuers and service providers adhere to the same rules and regulations. A Crypto Asset Service Provider (CASP) license issued by one EU member state permits companies to extend their services across the bloc.
Since its approval, several crypto firms in different European countries have applied for a MiCA license.
MoonPay was one of the first international companies to receive this license in the Netherlands earlier this month. BitStaete, ZBD, and Hidden Road also received approval from the Dutch Authority for the Financial Markets (AFM).
Socios.com also announced approval from the Malta Financial Services Authority (MFSA) for a MiCA license. This move allows the fan engagement platform to function as a regulated provider of virtual financial assets.
Educational Barriers Hinder Further Institutional Involvement
While investors are slowly mobilizing toward a more widespread crypto adoption, educational barriers remain.
“Investing into cryptocurrency directly remains a hurdle, simply because the learning curve remains steep,” said Chen.
Conducted in October 2024, the “State of Crypto Literacy” survey provided a balanced sample of 670 US respondents across age, gender, and income.
According to the results, only 31.8% of respondents said they had “a great deal” of knowledge in crypto. The report also highlighted the barriers to broader adoption, with 26.6% of respondents reporting the need to understand what gives a cryptocurrency value.
An overall lack of knowledge over more advanced topics like decentralized finance (DeFi) and staking also became apparent.
Only 22% of respondents correctly identified a private key as the critical tool for managing cryptocurrency, while 14% claimed to understand DeFi’s functionality. Only 9% reported knowing staking’s role in blockchain ecosystems.
“People are asking for crypto more than ever, but are they getting the right help to come into this space?” Chen added.
The survey underlines the critical role of crypto literacy in fostering trust and driving broader adoption within the crypto industry. Bridging this knowledge gap among investors and individuals will be crucial for institutional involvement in crypto to continue.
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