A significant shift is underway in the cryptocurrency sector as institutional players evolve their approach. Once satisfied with holding digital assets in hopes of long-term price appreciation, these investors are now seeking regular income streams from their crypto holdings. Brett Tejpaul, head of Coinbase’s institutional business, reports that major organizations increasingly favor active management strategies over simply buying and holding.
Rising Demand Drives Innovative Crypto Products
Tejpaul describes the current movement as a “second wave” of institutional involvement in crypto, where participants demand more than a passive investment. Reflecting this trend, Coinbase recently partnered with financial services firm Apex Group to launch a tokenized share of the Bitcoin Yield Fund on the Base blockchain. The fund targets single-digit yields by using Bitcoin for strategies like options selling or lending, with returns dependent on market conditions.
This income-focused approach is gaining momentum among traditional finance giants as well. BlackRock’s recent rollout of the iShares Staked Ethereum Trust ETF (ETHB) exemplifies the shift toward yield-oriented products, allowing investors to earn rewards by securing the Ethereum network. Such offerings mirror “structured products” found in conventional markets, utilizing various futures and options combinations to target specific returns.
One of the primary drivers behind the surge in derivatives and yield strategies in digital assets is increased regulatory clarity. The emergence of clearer regulatory frameworks has made it easier for institutional capital to enter the market, fostering greater confidence in crypto-based investments.
Tokenization Accelerates Blockchain Adoption
Institutional firms are investigating blockchain technology not only as an investment vehicle but also as infrastructure for payments, settlements, and transparency. At the heart of this adoption is tokenization—the process of representing fund shares or assets on-chain. This enables seamless and instant transfers of ownership, offering a practical alternative to the slow and sometimes cumbersome settlement procedures common in traditional finance.
According to Tejpaul, nearly half of all institutional discussions now touch on stablecoins and tokenization, particularly as recent legal developments in the United States trigger a surge of interest. Large financial institutions are piloting blockchain systems to move money across borders more rapidly and at lower cost compared to legacy payment rails.
Supporting the growth of this sector are legislative initiatives such as the GENIUS Act in the U.S., which establishes regulatory guidelines for stablecoins. The proposed CLARITY Act is also expected to clarify how digital assets may be issued and traded. These laws are opening the gates for institutions eager to develop blockchain-based financial products.
Key industry players are already embracing these models. BlackRock’s tokenized U.S. Treasury fund, JPMorgan’s blockchain-powered payments and custody solutions, and Franklin Templeton’s on-chain money market funds all signal a broad industry pivot. Both traditional and crypto-native financial organizations are in a race to deploy stablecoin and tokenization architectures at scale.
This so-called “second wave” extends beyond hedge funds and high-net-worth individuals, now drawing in banks and payment firms investing in crypto infrastructure. Stablecoins, often backed by short-term government debt, increasingly offer returns comparable to conventional cash management tools.
Market structure itself is being transformed as leading U.S. exchanges, including the New York Stock Exchange and Nasdaq, prepare for round-the-clock trading. Blockchain-based settlement reduces counterparty risk, speeds up transaction cycles, and lowers costs—advancing the vision of a more transparent financial system.
“People want to know where their capital is. No one wants their funds tied up in lengthy settlements,” Tejpaul observes.
