SEC custody rule revisions and Bitcoin’s surge past $63,000 fuel institutional crypto adoption, with major banks and asset managers expanding tokenization infrastructure for real-world assets.
“We’re witnessing the institutionalization of crypto infrastructure,” stated Apollo CIO Scott Kleinman on July 12, 2024, as U.S. Bank unveiled digital asset custody services following SEC proposals to ease adviser custody requirements.
Regulatory Shifts Enable Institutional Entry
The SEC’s proposed amendments to Rule 206(4)-2 on July 10 2024 mark a pivotal moment, permitting registered investment advisers to custody crypto assets through qualified third parties. This regulatory shift follows U.S. Bank’s July 9 partnership announcement with Securitize to offer compliant digital asset custody solutions targeting corporate treasury clients.
Bitcoin’s Rally Meets Real-World Asset Momentum
Bitcoin surged 12% weekly to $63,200 as BlackRock’s BUIDL tokenized fund surpassed $500M AUM on July 12. Apollo Global Management’s $50M investment in Plume Network highlights growing institutional demand for tokenized RWAs, particularly in private credit and short-term debt instruments.
Hybrid Financial Infrastructure Emerges
ING’s participation in Project Guardian’s euro stablecoin pilot aligns with SWIFT’s July 11 confirmation of CBDC-stablecoin interoperability tests. BIS researchers note this convergence addresses the “plumbing problem” preventing institutional-scale blockchain adoption, projecting $16T in tokenized markets by 2030.
Historical Precedents and Market Evolution
The current institutional pivot mirrors 2020’s OCC guidance allowing banks to custody crypto, which initially drew cautious responses. Bitcoin’s 2017 rally saw similar enthusiasm but lacked today’s regulatory frameworks and institutional-grade infrastructure. The 2021 NFT boom demonstrated tokenization’s potential, though focused on digital collectibles rather than financial instruments. As BIS economist Hyun Song Shin observed: “Tokenization’s true test lies in enhancing liquidity for traditionally illiquid assets – something blockchain’s programmability uniquely enables.”
