Crypto World
NYSE Lifts Crypto Options Cap Across 11 BTC and ETH ETFs
Two NYSE-affiliated venues have scrapped the 25,000-contract cap on options tied to 11 crypto ETF options, a move the exchanges filed with the Federal Register on March 10. The Securities and Exchange Commission acknowledged the rule alterations on Sunday by waiving the standard 30-day waiting period, meaning the changes are now in effect. The initiative removes price-discovery restrictions and the position-limit cap that had governed crypto ETF options since their November 2024 debut.
The policy shift ushers crypto ETF options closer to the regime applied to other commodity ETFs, potentially boosting institutional trading flexibility, liquidity, and ease of entry and exit. The development also paves the way for FLEX options—customizable terms such as non-standard strike prices, expiration dates, and exercise styles—to be applied to crypto ETF options.
Among the 11 crypto ETF options affected are major listings from BlackRock, Fidelity, and ARK, including BlackRock’s iShares Bitcoin Trust (IBIT), Fidelity’s Wise Origin Bitcoin Fund (FBTC), and ARK 21Shares Bitcoin ETF (ARKB). The notice also covers Bitcoin and Ether ETFs issued by Bitwise and Grayscale, expanding a footprint that has grown since the initial option-limits regime was put in place.
In parallel, the SEC’s acknowledgment of the rule changes adds a note of continuity to an ongoing regulatory arc around crypto ETF products. The latest action follows a July decision that removed the 25,000-contract limit for the Grayscale Bitcoin Trust ETF (GBTC), signaling a broader regulatory openness to easing constraints on crypto-derived derivatives.
Beyond the NYSE venues, another development looms: Nasdaq’s options arm, Nasdaq International Securities Exchange, has filed to raise the contract position limit for BlackRock’s IBIT to 1 million. That proposal remains under review by the SEC as of a February 27 notice, underscoring an industry-wide interest in expanding capacity for crypto-based hedging and trading instruments.
The shift comes against a backdrop of heightened attention to liquidity and transparency in crypto markets, with exchanges and issuers seeking to improve price discovery and provide more robust hedging tools for institutional participants. While the core economics of crypto ETFs and their options remain subject to market forces, removing artificial caps can enhance capital efficiency for institutions, market-makers, and sophisticated retail participants alike.
Key takeaways
- The NYSE Arca and NYSE American have removed the 25,000-contract limit and price-discovery restrictions on options linked to 11 crypto ETF options, effective after SEC’s waiver of the standard 30-day waiting period.
- The change brings crypto ETF options closer to the handling of traditional commodity ETF options and enables FLEX options with customizable terms.
- 11 crypto ETF options are affected, including BlackRock’s IBIT, Fidelity’s FBTC, and ARK’s ARKB, with Bitwise and Grayscale’s BTC-related offerings also covered.
- The development follows earlier regulatory moves, including the SEC’s July decision to remove the 25,000-contract cap for GBTC, signaling a gradual easing of previous constraints.
- Nasdaq ISE is seeking to lift its own cap for IBIT to 1 million contracts, a proposal still under SEC review as of late February.
Regulatory steps and what changed
NYSE Arca Inc. and NYSE American LLC filed three rule changes with the Federal Register on March 10 to eliminate the 25,000-contract position limit and price-discovery restrictions on options tied to 11 crypto ETF products listed on their exchanges. The actions mark a notable shift from the framework established when crypto ETF options first began trading in November 2024, when broad caps were designed to curb market manipulation and volatility.
The SEC’s decision to waive the usual 30-day waiting period means the amendments are now in effect. This waiver eliminates a standard cooling-off period that typically gives market participants time to react to regulatory changes, accelerating the practical impact of the rules for exchanges, brokers, and traders.
From a structural perspective, the moves align crypto ETF options with the broader approach applied to commodity ETF options, potentially improving liquidity by enabling more complete hedging and arb opportunities. The removal of the cap also dovetails with a push to offer more flexible trading tools, including FLEX options, which permit non-standard strike prices and expiration dates and more diverse exercise styles.
Which products are affected and why it matters
While the notice does not list every instrument in detail, it confirms that 11 crypto ETF options are covered. The set includes high-profile offerings from BlackRock, Fidelity, and ARK, notably the iShares Bitcoin Trust (IBIT), the Wise Origin Bitcoin Fund (FBTC), and ARK 21Shares Bitcoin ETF (ARKB). The scope also extends to Bitcoin- and Ether-focused ETFs issued by Bitwise and Grayscale, underscoring a broadening ensemble of crypto-linked options now subject to a more permissive regime.
For investors, the implications are tangible. Fewer constraints on contract size and governance around price discovery can translate into deeper liquidity and more efficient entry and exit for complex hedging strategies. Market-makers gain additional flexibility in pricing and risk management, which could reduce spreads and improve execution quality in volatile periods. Traders who rely on precise volatility hedges or sophisticated spreads may find the availability of FLEX options particularly advantageous, enabling strategies that were previously constrained by standard exchange rules.
From an issuer perspective, these changes could support more robust options markets around crypto ETFs, enhancing the attractiveness of listed products for institutions that require scalable hedging and leverage management. The broader regulatory signal—easing limits while maintaining oversight—also matters for credibility and institutional onboarding within the crypto asset space.
Nevertheless, observers should note that the crypto ETF landscape remains a function of evolving market structure, regulatory sentiment, and product demand. While the caps are lifting, liquidity will still hinge on actual trading volumes, market-making capacity, and the availability of reliable underlying data for price discovery. The market will likely watch volumes and bid-ask dynamics closely in the coming quarters to gauge the real-world impact of the change.
Broader context and what to watch next
The SEC’s posture toward crypto-based options continues to unfold. The Nasdaq ISE’s bid to raise IBIT’s position limit to 1 million contracts illustrates a broader ambition to expand trading capability for crypto ETFs beyond the NYSE-anchored venues. As regulators weigh these proposals, the interaction between rule changes, liquidity, and market integrity will be a focal point for investors and issuers alike.
Market participants should also monitor how providers respond to the new FLEX options framework. Customizable terms could unlock nuanced hedging structures that align with institutional risk management needs, but they may also introduce additional complexity that requires careful governance and risk controls.
In short, the current move by NYSE Arca and NYSE American marks a meaningful step toward normalizing crypto ETF options with traditional derivatives markets. If liquidity improves as anticipated, more investors may incorporate crypto ETF options into diversified hedging programs, potentially deepening the role of listed crypto products in mainstream portfolios. The coming months will reveal how the market consumes these changes and whether further regulatory shifts follow.
Readers should keep an eye on trading data for IBIT, FBTC, ARKB, and related Bitwise and Grayscale ETFs as well as any developments from the SEC or Nasdaq ISE regarding contract limits, price-discovery mechanics, and the broader trajectory of crypto derivatives regulation.
Crypto and the wider markets tumbled on Monday as the US and Iran escalated threats toward one another for the fourth week, sending oil prices seesawing.
US President Donald Trump posted to Truth Social on Sunday that the US would “hit and obliterate” Iranian power plants, “starting with the biggest one first,” if the country didn’t open the Strait within 48 hours.
Iran responded by saying it will answer any US strikes on its power or water infrastructure with attacks on US and Israeli assets in the Gulf and threatened to completely close the Strait of Hormuz, one of the world’s vital oil shipping lanes.
Bitcoin (BTC), long seen by its backers as a so-called “safe-haven” asset like gold, dropped 1.8% in the last 24 hours to $68,160, recovering from a low of below $67,600 in late trading on Sunday.
Bitcoin’s price drop caused a surge in liquidations across crypto, with $336.3 million wiped from the market in the last day, with nearly a third of the volume, or $100 million, caused by failed Bitcoin long bets, according to CoinGlass.
Rachael Lucas, an analyst at the crypto exchange BTC Markets, told Cointelegraph that crypto “is trading in lockstep with equities right now, not as a haven, and sentiment is sitting at historic lows, with the Fear and Greed Index deep in ‘extreme fear’ territory at 8.”
Oil chops, Asia markets fall
Stock markets around Asia also reacted to the tit-for-tat threats, with Australian and New Zealand markets both down 0.8%, while Japan had fallen over 4%.
The price of crude oil briefly spiked to a high of just over $100 a barrel in early trading on Monday before quickly dropping to $97.20. It has since steadily climbed to $99.30 at the time of writing.
Meanwhile, Brent crude oil, considered a benchmark for purchasing oil worldwide, jumped to over $114 per barrel but settled below $113.
Lucas said that the future of crypto markets hinges on the de-escalation of the Iran war and the decisions of the US Federal Reserve.
She added that Brent’s price jump “is feeding inflation expectations, and the probability of a Fed rate hike has jumped from zero to 12.4% in a single week.”
“That is a significant macro repricing that crypto will continue to reflect until there is clarity on both fronts,” she added.
Related: Bitcoin risks 50% drop as BTC’s positive correlation with US stocks grows
Lucas said if the Iran war de-escalates, “crypto would be among the fastest risk assets to recover. However, this conflict has no clear negotiating counterpart and no defined exit timeline, which makes that outcome difficult to call in the near term.”
She added that $68,000 is the “immediate level” to watch for if Bitcoin has support, with $65,800 being “the next meaningful support if that gives way.”
“To the upside, Bitcoin needs to reclaim $71,500 before any recovery narrative gains credibility,” Lucas said.
She added that Bitcoin still had strong institutional support, with $1.43 billion in net inflows to Bitcoin exchange-traded funds so far this month.
“When sentiment is this low and institutional infrastructure is this strong, history suggests the setup for recovery is building, even if the timing remains uncertain,” Lucas said.
Big Questions: Is China hoarding gold so yuan becomes global reserve instead of USD?
Barbara Fried and Joseph Bankman, the parents of FTX founder Sam Bankman-Fried, who was convicted after the exchange’s collapse, used their first televised interview to challenge the core premise of his conviction, arguing that no customer money was ultimately lost.
“The money was always there,” Bankman said during a weekend interview with CNN’s Michael Smerconish. “These were very profitable companies with billions of extra assets.”
The timing is not incidental. At the end of March, the FTX Recovery Trust is set to distribute about $2.2 billion in its fourth payout, bringing total recoveries to roughly $10 billion. Several U.S. customer classes will reach 100% recovery, with one class at 120%. For Bankman-Fried’s parents, those figures should mean SBF’s exoneration.
“Everybody has been made whole with 18 to 43 percent interest,” Fried said.
All distributions are denominated in U.S. dollars and are fixed to asset prices as of the November 2022 bankruptcy filing, when bitcoin traded near $16,800. FTX collapsed in late 2022, upending investor confidence and sparking a wave of regulatory scrutiny across the industry.
Bitcoin has been on a rollercoaster since then, shooting up to over $126,000 during the fall of 2025, and now trading around $69,000, way above the price in late 2022.
However, an FTX customer who held one bitcoin receives the dollar value of that 2022 claim, plus interest, not the asset or its current price. The estate is returning roughly 119% of a claim frozen at a fraction of today’s market value.
FTX creditor representative Sunil Kavuri has publicly rejected the framing, writing that “FTX creditors are not whole.”
FTX Bankruptcy recovery rates in real crypto terms
FTX creditors are not whole
9% to 46%: Real crypto terms recovery but probably in reality lower as crypto prices higher when 143% paid
Also seen on CT some:
1) Protect known scammers/liars/fraudsters
2) Attack those helping… pic.twitter.com/pUcjIPFsnv— Sunil (FTX Creditor Champion) (@sunil_trades) November 2, 2025
The parents’ defense also runs counter to the regulatory framework established in response to the collapse. Bankman described the transfer of customer funds to sister company Alameda Research as routine.
“They were borrowed by Alameda from FTX,” he said. “Alameda acted like everybody else, putting in money and borrowing money.”
If accepted, that argument would normalize the commingling of customer assets with a proprietary trading firm, the exact practice new rules in Hong Kong, the E.U., and proposed U.S. legislation now prohibit. The logic that exonerates Bankman-Fried is the same logic regulators moved to eliminate.
Fried went further, calling the prosecution “essentially political” and arguing the Biden administration “had decided to destroy crypto.”
The political framing reflects a broader clemency push toward President Donald Trump, as Bankman-Fried continues to support White House policy from prison via posts on X.
Smerconish noted that Judge Lewis Kaplan, who presided over SBF’s criminal trial and sentenced him to 25 years, is the same federal judge who oversaw E. Jean Carroll’s civil case against Trump, a point he said was “not lost on” the family.
Asked what she would say to Trump, Fried called her son “one of the most brilliant, talented young men of his generation” and said he would be “an enormous benefit to the economy” if freed.
But that door appears closed, at least for now.
Trump said in a January interview with the New York Times that he would not consider a pardon for Bankman-Fried even as Trump has granted clemency to other crypto figures, including Silk Road founder Ross Ulbricht and former Binance CEO Changpeng Zhao.
Polymarket bettors give it a 12% chance of happening.
Bankman-Fried’s appeal remains pending, and his motion for a new trial faces opposition from prosecutors who have dismissed his claims of political bias.
Crypto World
South Korea crypto liquidity tumbles as stablecoin balances plunge 55% and stock heat up
Stablecoin balances in South Korea have fallen sharply since July even as stock inflows rise, underscoring a shift in where money is flowing.
The total amount of these so-called tokenized versions of fiat currencies held in wallets tied to South Korea’s five largest crypto exchanges have plunged 55%, with on-chain data pointing to a sharp wave of outflows triggered by the won’s break past 1,500 per dollar in mid-March.
Data from Allium Labs, tracking Ethereum and Tron wallets across Upbit, Bithumb, Coinone, Korbit, and GOPAX, shows that combined stablecoin holdings dropped from $575 million in July 2025 to roughly $188 million as of mid-March, with the decline accelerating as the won slid to 16-year lows against the dollar.
The timing suggests traders sold tether at elevated USD/KRW levels after the won weakened past 1,500 per dollar in mid-March, a threshold not seen since the 2008 financial crisis.
The weaker currency amplified the incentive to exit dollar-denominated holdings, with traders converting into won and redeploying into domestic assets, according to DNTV Research founder Bradley Park.
The outflows mark the latest phase of a broader migration of Korean retail capital from crypto into equities, a shift CoinDesk first documented in November. But where that earlier rotation was driven largely by narrative, with traders chasing AI-linked chipmakers as altcoin momentum faded, the latest drawdown appears tied to a specific FX trigger rather than a change in risk appetite.
South Korea’s government has since intensified efforts to attract capital into domestic markets through new policies such as “repatriation” accounts that offer up to 100% capital gains tax exemptions for investors who sell overseas assets and reinvest locally.
That shift is visible in brokerage data. Investor deposits, a proxy for cash available to buy stocks, fell from roughly ₩131 trillion ($86 billion) in early March to around ₩112 trillion ($74 billion) following the mid-month currency move, indicating that capital was being actively deployed into equities as stablecoin balances declined. Deposits have since begun to stabilize, suggesting fresh inflows are replenishing the pool of buying power.
The KOSPI, already up 75% in 2025, has gained another 37% this year, making it the world’s best-performing major index. The rally is highly concentrated, with Samsung Electronics and SK Hynix accounting for roughly half of market capitalization and more than 50% of projected profits, positioning them as the primary destination for both retail and institutional flows.
Broader stablecoin transaction volumes across Asia have ticked up over the last year, according to data from Artemis, suggesting the drawdown on Korean exchanges reflects domestic capital rotation rather than a region-wide pullback.
For crypto markets, the shift underscores the loss of one of their most important retail liquidity pools.
Korean participation has historically amplified market cycles, and the data now shows capital is not sitting idle but being actively redeployed. Whether those flows return may depend less on crypto narratives than on the sustainability of Korea’s equity rally.
A sharp correction, particularly in a market so concentrated in semiconductor stocks, could quickly force capital to rotate again. KOSPI has come under pressure recently as disruptions in oil transits through the Strait of Hormuz has sparked energy supply concerns.
Banks are increasingly testing tokenized deposits as a practical way to move traditional commercial bank money onto blockchain-based payment and settlement rails. A new report from the real-world asset data platform RWA.io, with input from UK Finance, Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN Amro and Digital Asset, argues that tokenized deposits are emerging alongside stablecoins and central bank digital currencies as part of a broader on-chain cash stack for the financial system.
Tokenized deposits are digital representations of ordinary bank deposits on blockchain or other distributed ledger infrastructure. Unlike many stablecoins, they are direct liabilities of the issuing bank and remain governed by existing banking frameworks, including deposit insurance, capital requirements and anti-money laundering and know-your-customer rules. The report highlights a growing slate of pilots and deployments across Europe as banks seek to preserve their role in payments, treasury and deposit-taking amid a proliferation of digital cash instruments.
The report notes visible momentum in Europe, anchored by recent public pilots. In January, Lloyds Banking Group and Archax announced they completed the UK’s first public blockchain transaction using tokenized deposits on the Canton Network. Separately, UK Finance’s Great British Tokenised Deposit pilot is examining person-to-person marketplace payments, remortgaging and digital-asset settlement with a target to advance through mid-2026.
The broader narrative is that banks are trying to reposition themselves at the center of digital money flows as tokenized forms of cash multiply and new settlement rails emerge. The two-tier monetary-ecosystem picture that underpins these efforts is a key theme of the report and a reminder that commercial bank money continues to underpin everyday payments even as the frontier of digital assets expands.
Tokenized deposits as a middle ground in the stablecoin, CBDC debate
UK Finance frames tokenized deposits as a vital bridge in a future “multi-money” ecosystem. In their view, tokenized deposits will sit alongside privately issued stablecoins and, potentially, central bank digital currencies, offering a framework in which traditional bank money can operate on new digital rails while preserving regulatory protections and consumer safeguards.
“Bringing that money onto digital rails will underpin the next generation of digital finance,” said Marko Vidrih, co-founder and chief operating officer at RWA.io. “For that reason, it is important to understand how tokenized deposits fit within the broader digital money ecosystem alongside stablecoins and CBDCs.”
ECB advances digital euro work, building tokenized money rails
The policy backdrop in Europe is advancing in parallel. The European Central Bank is expanding its digital euro program as private and public digital money compete for cross-border and domestic use. The ECB has opened applications for experts to contribute to workstreams on how a digital euro would function across ATMs, payment terminals and acceptance infrastructure, with plans to begin a 12-month pilot in the second half of 2027.
In March, the ECB unveiled Appia, its long-term blueprint for tokenized markets in Europe that would work with central bank money. A core element of Appia is Pontes, a new settlement mechanism designed to connect blockchain-based platforms to the Eurosystem’s payment infrastructure. The existing framework, TARGET Services, already processes large-value euro payments, securities settlements and instant payments across Europe. Pontes is scheduled to launch in the third quarter of 2026, with feedback from Appia’s consultation guiding broader tokenized-finance framework decisions for Europe.
These developments come as policymakers seek to balance innovation with safety, and as banks, fintechs and custodians explore how tokenized assets and on-chain settlement fit within existing regulatory and supervisory regimes.
For market participants, the implication is clear: tokenized deposits could serve as a practical on-ramp for institutions anchored in traditional banking to participate in the digitized economy without abandoning their regulated foundations. The combined push—from UK pilots to European rails—highlights a trend toward interoperable, regulated on-chain money that preserves the institutional protections that users rely on today.
As the ecosystem evolves, investors and users will be watching how these rails interact with private-stablecoin ecosystems, CBDC pilots and cross-border settlement standards. The success of tokenized deposits will hinge on risk controls, interoperable settlement timelines, and the readiness of banks to scale these pilots into durable, insured, compliant products that can operate alongside existing payment networks.
What remains uncertain is how quickly regulators will align around clear standards for tokenized deposits, what coverage and insurance will apply at scale, and how liquidity and settlement finality will be ensured across heterogeneous blockchain rails. Yet the convergence of bank money with tokenized infrastructure marks a notable shift in the trajectory of digital finance, one that could influence how institutions price, manage and settle money in a world where digital and traditional money increasingly coexist.
Readers should watch the next phase of UK pilots and the European rollout of Appia and Pontes for concrete milestones on settlement timings, interoperability tests and regulatory clarity that could determine whether tokenized deposits become a standard feature of the financial system, or a pioneering set of pilots with limited upside outside controlled environments.
Strategy executive chair Michael Saylor has hinted that his company bought more Bitcoin despite a market tumble over the weekend that has now pushed his company’s Bitcoin bet into a 10% loss.
“The Orange March Continues,” Saylor posted to X on Sunday, alongside a chart showing Strategy’s roughly $52 billion worth of Bitcoin (BTC) purchases since August 2020.
Saylor often posts the chart as a signal that his company has bought, or plans to buy more Bitcoin and it is often seen as a bullish signal for investors.
The potential buy would add to Strategy’s larger-than-usual Bitcoin purchases this month, including 17,994 Bitcoin on March 9 and 22,337 Bitcoin on March 16, amounting to $2.9 billion in Bitcoin.
It also comes amid heightened military tensions between US and Iran, causing fears of a prolonged energy and oil crisis.
Bitcoin fell 4% to $67,725 on Sunday before partially recovering to $68,100 at the time of writing.
With Strategy’s average cost per Bitcoin at around $75,696, the company is currently down more than 10% on its Bitcoin bet, according to BitcoinTreasuries.
Strategy had been funding much of its Bitcoin purchases through high-yield perpetual preferred stock offerings — such as Stretch (STRC) — giving investors monthly dividends while the company grows its Bitcoin treasury without diluting MSTR common shares.
However, it halted funding through STRC last week after failing to raise fresh capital from the preferred stock.
MSTR back in the red after short-lived rally
Strategy (MSTR) shares fell 6.6% last week to $135.66, erasing some of the double-digit gains they made earlier in the month, Google Finance data shows.
It was one of the top performers in the US stock market from January 2023 through to July 2025, but has since fallen 68.7% from its $434.20 all-time high.
Related: Scaramucci says BTC’s 4-year cycle still in play, forecasts rise in Q4
Other corporate Bitcoin treasury stocks have been hit even harder, which caused some doubt over the sustainability of corporate crypto treasuries last year.
Magazine: Big Questions: Can Bitcoin save you from the dreaded Cantillon Effect?
Two New York Stock Exchange-affiliated exchanges have removed the 25,000 contract position limit on options tied to 11 crypto exchange-traded funds.
NYSE Arca and NYSE American each filed three rule changes in the Federal Register on March 10 to remove contract position limits and price discovery restrictions for options linked to Bitcoin (BTC) and Ether (ETH) ETFs listed on their exchanges.
These were acknowledged by the Securities and Exchange Commission on Sunday, with the SEC waiving the standard 30-day waiting period for both sets of proposed rule changes, meaning they are now in effect.
The limits were imposed when crypto ETF options first started trading in November 2024. Limits of this nature are typically imposed to prevent market manipulation and volatility. T
The removal of those limits now puts them closer to how other commodity ETF options are treated, and gives institutions greater trading flexibility while also potentially boosting liquidity and making it easier to enter and exit positions.
It also allows the crypto options to be traded as FLEX options, which include customizable terms such as non-standard strike prices, expiration dates and exercise styles.
Related: Scaramucci says BTC’s 4-year cycle still in play, forecasts rise in Q4
A total of 11 crypto ETF options are affected by the rule changes, including BlackRock’s iShares Bitcoin Trust (IBIT), Fidelity’s Wise Origin Bitcoin Fund (FBTC) and ARK 21Shares Bitcoin ETF (ARKB).
Bitcoin and Ether ETFs issued by Bitwise and Grayscale are also affected.
In late July, the SEC approved removing the 25,000-contract position limit for the Grayscale Bitcoin Trust ETF (GBTC).
Meanwhile, one of Nasdaq’s options exchanges, Nasdaq International Securities Exchange, is seeking to raise the contract position limit for BlackRock’s IBIT to 1 million.
That proposed rule change is still under review, according to a Feb. 27 notice from the SEC.
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Crypto World
Attacker exploits Resolv USR stablecoin to mint 80 million tokens, cashes out $25M: Resolv Labs
An attacker has successfully exploited the Resolv USR stablecoin protocol, minting 80 million tokens and withdrawing at least $25 million before the depeg.
An attacker has exploited Resolv Labs’ USR stablecoin to mint 80 million tokens, causing the stablecoin to depeg from its $1 peg. The attacker has reportedly cashed out at least $25 million from the exploit, marking a significant security breach for the protocol.
The incident represents a critical failure in Resolv Labs’ token minting controls and represents a major loss for USR holders and the protocol. Stablecoin exploits of this magnitude underscore ongoing risks in DeFi protocols, particularly around access controls and minting mechanisms.
Sources: ResolvLabs on X, PeckShieldAlert on X
This article was generated automatically by The Defiant’s AI news system from publicly available sources.
Banks are exploring tokenized deposits as they test ways to move commercial bank money onto blockchain-based payment and settlement infrastructure, according to a new report from real-world asset data platform RWA.io
The report, which was authored by RWA.io with contributions from industry participants including UK Finance, Citi, BNY, JPMorgan’s Kinexys, Standard Chartered, ABN Amro and Digital Asset, argues that tokenized deposits are emerging alongside stablecoins and central bank digital currencies as part of a broader onchain cash stack.
Tokenized deposits are digital representations of traditional bank deposits on blockchain or other distributed ledger infrastructure. Unlike many stablecoins, they are direct liabilities of the issuing bank and sit within existing banking frameworks, including deposit insurance, capital requirements, and Anti-Money Laundering and Know Your Customer rules.
The report points to a growing set of bank pilots and deployments in Europe. In January, Lloyds Banking Group and Archax said they completed the UK’s first public blockchain transaction using tokenized deposits on the Canton Network, while UK Finance’s Great British Tokenised Deposit pilot is testing person-to-person marketplace payments, remortgaging and digital-asset settlement through mid-2026.
The broader push reflects how banks are trying to preserve their role in payments, treasury and deposit-taking as digital cash instruments multiply.
Tokenized deposits as a middle ground in the stablecoin, CBDC debate
UK Finance said in the report that tokenized deposits will play a vital role in a future “multi-money” world. The industry group said tokenized deposits will complement other forms of digital money, “including privately and potentially publicly issued monies.”
Related: BNY launches tokenized deposits amid TradFi rush into blockchain and crypto
Marko Vidrih, the co-founder and chief operating officer at RWA.io said that while much of the attention in digital money focuses on stablecoins or central bank digital currencies (CBDCs), the global financial system still runs on commercial bank money.
“Bringing that money onto digital rails will underpin the next generation of digital finance,” Vidrih said. “For that reason, it is important to understand how tokenized deposits fit within the broader digital money ecosystem alongside stablecoins and CBDCs.”
ECB advances digital euro work, builds tokenized money rails
The European policy backdrop is moving in parallel. The European Central Bank is advancing work on a digital euro as US dollar-backed stablecoins continue to dominate digital asset markets and cross-border transactions.
The ECB recently opened applications for experts to contribute to workstreams focused on how a digital euro would function across ATMs, payment terminals and acceptance infrastructure. The ECB has also said it aims to begin a 12-month pilot for the digital euro in the second half of 2027.
In March, the European Central Bank unveiled Appia, its long-term plan for how tokenized financial markets in Europe could work using central bank money. A key part of that plan is Pontes, a new settlement mechanism designed to let blockchain-based financial platforms connect to the Eurosystem’s existing payment infrastructure.
That existing infrastructure is known as TARGET Services, which already processes large-value euro payments, securities settlement and instant payments across Europe. The ECB said Pontes is scheduled to launch in the third quarter of 2026, while feedback gathered through Appia’s consultation process will help shape the wider framework for Europe’s tokenized financial system.
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The 2026 split between gold and Bitcoin is being read through the lens of two distinct buyer groups, according to Stephen Coltman, head of macro at 21Shares, a provider of crypto exchange-traded products. While gold has benefited from a sustained wave of central-bank purchases, Bitcoin remains largely a retail asset, with ownership concentrated among individuals rather than institutions. Coltman framed the dynamic as a macro-driven divergence that could persist as fundamentals evolve.
Physical gold has a greater geopolitical strategic role currently, as the asset of choice for state actors who want to store wealth in a way that is protected from rival powers. This has meant that it has traded with greater sensitivity to deteriorating international relations.
On the other hand, Bitcoin’s practical appeal centers on everyday users seeking resilience amid financial stress. Coltman notes that BTC has significant appeal as an alternative lifeline when local banking infrastructure falters or access to the traditional financial system is constrained, a feature that becomes particularly salient during crises. This contrast helps explain why gold and Bitcoin can diverge at the same time, even as investors watch both assets for different kinds of hedging and exposure.
Coltman also highlighted the inverse correlation between BTC and gold, suggesting that investors may benefit from holding both assets to tap into their respective strengths—gold as a strategic reserve and Bitcoin as a mobile, permissionless financial option during disruptions.
Macro forces through most of the last few years pushed gold to a record run, with the precious metal climbing toward near $5,600 per ounce in January 2026. Yet heightened volatility and swift drawdowns pulled prices back to roughly $4,497 per ounce, renewing the debate about gold’s role as a store of value and how it will fare against Bitcoin in the medium term.
Key takeaways
- Gold’s rally has been driven predominantly by central-bank purchasing, while Bitcoin remains more retail-led in ownership and demand.
- The BTC–gold relationship tends to move inversely, suggesting a potential diversification benefit for investors who allocate to both assets.
- January 2026 saw gold scaling multi-decade highs near $5,600/oz, followed by a retreat to around $4,500/oz amid renewed volatility.
- Analysts diverge on the long-term leadership: some see BTC outperforming gold over the next few years, while others argue gold’s reserve-asset status strengthens its staying power.
Two camps on future dominance: BTC versus gold
Among market observers, the tug-of-war between Bitcoin and gold persists as a central theme for the years ahead. Macro economist Lyn Alden contends that Bitcoin is likely to outperform gold over the next three years, arguing that the existing rally in gold could face diminishing returns in the next cycle. As Alden put it in discussions cited in coverage around these views, the pendulum typically swings between the two assets, and heavy gains for gold could temper BTC’s upside in the near term.
But not everyone sees Bitcoin eclipsing gold. Ray Dalio, the famed hedge-fund veteran, maintains that BTC will not replace gold as a store of value. He points to Bitcoin’s exposure to risk-on dynamics and its correlation with technology equities, whereas gold carries entrenched status as a reserve asset within the global banking system. The debate underscores a broader question: which asset better preserves wealth across regimes of stress and monetary policy shifts?
Geopolitics, crises, and the case for 24/7 access
The 2026 period has also underscored the practical differences between the two assets during real-world events. Coltman cited episodes such as the Iran-related conflict, where financial infrastructure and market access in some regions faced disruption. In such moments, the appeal of a global, 24/7 settlement layer—Bitcoin—appears to offer continuity when traditional financial rails are strained. That sense of resilience helps explain why BTC can behave differently from gold in the same geopolitical environment.
The dynamic is not purely academic. In times of stress, gold’s geopolitical role as a state-aligned wealth store remains a stabilizing force for many investors who seek a traditional hedge within a framework of central-bank policy and international relations. Yet Bitcoin’s ability to function as a borderless, permissionless asset during crises adds a complementary edge for those who want an alternative pathway to financial access when banks and payments networks are disrupted.
What to watch next
As macro and geopolitical headwinds evolve, the balance between gold and Bitcoin will hinge on central-bank action, inflation dynamics, and how effectively both assets penetrate different investor cohorts. For traders and portfolio builders, monitoring central-bank balance-sheet trends, currency stability in stressed regions, and the pace of retail adoption for Bitcoin will be essential to gauge which asset gains resilience in the next phase of the cycle. The core tension—whether gold’s reserve role or Bitcoin’s crisis-resilience will lead—remains unresolved, but the ongoing dialogue among analysts signals that both assets will continue to play meaningful, albeit distinct, roles in diversified crypto and traditional portfolios.
Investors should stay alert to shifting macro signals and geopolitical developments, as these factors will continue to shape how gold and Bitcoin interact in 2026 and beyond. The landscape remains uncertain, but the case for a dual exposure—benefiting from the unique strengths of each asset—appears to be a persistent theme for informed market participants.
TLDR:
- Bitmine holds 4.6 million ETH, with 3 million actively staked and generating around $180 million annually.
- Ethereum’s 2.8% staking yield cuts the cost gap, meaning Lee needs only 8–9% more to match Saylor’s offer.
- Bitmine has been acquiring over 60,000 ETH weekly, building a low cost basis ahead of any product launch.
- Unlike Bitcoin, Ethereum’s native protocol yield subsidizes the dividend structure, making the flywheel self-reinforcing.
ETH Stretch may be the next big institutional product to emerge in the crypto market. Bitmine, led by strategist Tom Lee, currently holds 4.6 million ETH.
That figure represents nearly 4% of Ethereum’s total circulating supply. Of that holding, 3 million ETH is actively staked, generating around $180 million per year in protocol rewards.
Analyst Axel Bitblaze recently argued that Lee has the infrastructure to launch a Stretch-style fixed-yield product on this existing base.
Ethereum Staking Yield Creates a Structural Cost Advantage
Michael Saylor’s Stretch product offers a fixed 11.5% yield, with all proceeds going into Bitcoin. This buying pressure has pushed hundreds of millions into BTC each week.
Many credit this as a key reason Bitcoin held above $69,000. Without this demand, some analysts suggest prices would sit near $50,000.
Tom Lee, however, already runs a yield engine that Saylor does not have. Bitmine’s staked ETH generates about 2.8% annually from Ethereum’s protocol.
That income covers part of any fixed dividend Lee would need to pay out. Lee would only need to generate an additional 8–9% to match Saylor’s offer.
Bitblaze noted on X that this cost structure allows Lee to undercut Stretch on yield expenses. That margin could make the product more attractive to institutional capital.
Wall Street typically responds well to yield products with stronger cost profiles. Staking income is a meaningful competitive edge in this space.
Additionally, Bitmine has been buying over 60,000 ETH per week in current market conditions. The firm’s cost basis remains low, and Ethereum sentiment is broadly negative.
Those two factors create a favorable window for any product announcement. A low cost basis combined with native yield strengthens the overall case considerably.
The Ethereum Flywheel and Its Reflexivity Potential
The mechanics of an ETH Stretch product follow a clear and self-reinforcing loop. Every dollar raised would go toward buying more ETH on the open market.
More ETH purchased means more ETH available for staking. More staked ETH then generates additional protocol rewards to help fund the dividend.
This cycle differs from Saylor’s model in one key respect: Ethereum has native yield. Bitcoin has no protocol income, yet the BTC Stretch flywheel has still gained traction.
Ethereum’s staking rewards subsidize the structure from the start. That makes the feedback loop cheaper to run and easier to grow.
Bitblaze argued that Saylor’s flywheel works despite Bitcoin having no yield. Lee’s version, by contrast, would run on Ethereum’s own protocol income.
That distinction changes the product economics entirely. A yield-backed demand engine does not rely solely on price appreciation. It draws strength directly from the Ethereum protocol itself.
Should Lee announce such a product while sentiment is low, the price response could be rapid. Institutional capital targeting yield would flow in, driving ETH demand higher.
Higher ETH prices improve staking returns in dollar terms, attracting still more capital. That loop, once active, tends to accelerate.
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