BlackRock’s ICSH tokenized fund surpasses $500M AUM on Ethereum, while Morgan Stanley prepares a Q3 2024 crypto trading desk. Regulatory progress contrasts with inflation challenges as stablecoin market cap grows 6.5% YTD.
The crypto asset market is witnessing unprecedented institutional adoption, with BlackRock’s Ethereum-based ICSH fund crossing $500M in assets under management and Morgan Stanley gearing up to launch a dedicated crypto trading desk. Meanwhile, regulatory advancements like Wyoming’s approval of the Trump-linked USD1 stablecoin clash with persistent inflation concerns highlighted in recent Fed minutes, creating a complex landscape for treasury teams navigating digital asset diversification.
Institutional giants embrace crypto infrastructure
BlackRock’s ICSH tokenized government securities fund reached $503M AUM on July 15, according to Ethereum blockchain data. The fund, which represents one of the largest institutional uses of blockchain for traditional assets, leverages Ethereum’s network for 24/7 settlements. “This milestone proves tokenization solves real liquidity challenges for institutional portfolios,” noted Michael Shaulov, CEO of Fireblocks, in a July 16 interview with CoinDesk.
Morgan Stanley confirmed on July 12 through SEC filings its plans to launch a crypto trading desk in Q3 2024, marking the first major U.S. bank trading platform since Goldman Sachs’ brief foray in 2022. The desk will initially focus on Bitcoin and Ethereum derivatives, with plans to expand to spot trading pending regulatory approval.
Endowments follow Yale’s crypto lead
Brown University joined the institutional adoption wave with a $15M allocation to crypto ETFs, mirroring Yale University’s $400M blockchain fund investments disclosed earlier this year. “Endowments are recognizing crypto’s role as both an inflation hedge and alpha generator,” explained Brown’s CIO Jane Dietze in the university’s quarterly investment report.
This movement comes as CoinShares data from July 16 shows the stablecoin sector growing to $162B, driven largely by USDC’s 11% monthly expansion following the partial implementation of EU’s MiCA regulations. The growth represents a 6.5% year-to-date increase in stablecoin market capitalization.
Regulatory progress meets economic headwinds
Wyoming made headlines on July 11 by approving RightForge’s USD1 stablecoin, which features a Trump-aligned advisory board and requires 100% cash reserves. The approval comes as bipartisan stablecoin legislation remains stalled in Congress. “State-level initiatives like Wyoming’s may force federal action on stablecoin regulation,” predicted former CFTC chairman Christopher Giancarlo in a July 13 Bloomberg interview.
However, the Fed’s July 10 minutes revealed persistent inflation concerns, with core PCE projections at 2.7% through 2025. These economic conditions complicate stablecoins’ short-term yield appeal compared to Treasury Inflation-Protected Securities (TIPS), creating challenges for treasury teams evaluating digital asset allocations.
Historical context and market implications
The current institutional crypto adoption wave mirrors patterns seen in 2021 when Bitcoin’s price surged following MicroStrategy’s landmark corporate treasury allocation. However, today’s movement differs in its focus on infrastructure rather than speculative positioning, with tokenized Treasury products growing 92% in 2024 according to RWA.xyz data.
This maturation also recalls the 2017-2018 period when blockchain technology first gained serious institutional attention, though today’s regulatory environment and market infrastructure represent significant advancements. Bitcoin’s 0.87 correlation with gold in 2024, as measured by CoinMetrics, suggests digital assets are increasingly being viewed through a similar lens as traditional safe-haven assets during periods of geopolitical uncertainty.
