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Sui Blockchain Secures Institutional Backing as Grayscale Files ETF with Coinbase Custody

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21Shares Introduces JitoSOL ETP to Offer Staking Rewards via Solana

TLDR:

  • Grayscale’s S-1 amendment for Sui ETF with Coinbase custody brings institutional capital access channels. 
  • zkLogin technology eliminates seed phrases by enabling Google, Face ID, and phone authentication methods. 
  • Object-centric architecture processes transactions simultaneously, maintaining sub-cent fees during peak usage. 
  • Move programming language prevents asset duplication and deletion, eliminating common smart contract exploits.

 

The Sui blockchain has entered a new phase of development in February 2026 as institutional finance shows increased interest in the platform.

Grayscale recently amended its S-1 filing for a Sui exchange-traded fund, naming Coinbase as custodian. This development marks a shift from retail-driven speculation toward institutional infrastructure adoption.

The move signals growing recognition of Sui’s technical capabilities and regulatory compliance standards within traditional finance circles.

Institutional Capital Opens New Access Channels

The Grayscale ETF filing represents more than a routine regulatory submission. Exchange-traded funds transform digital tokens into recognized financial instruments accessible to pension funds and retirement accounts.

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These institutional investors can now gain exposure without managing wallets or private keys directly. Coinbase’s role as custodian addresses security and compliance requirements that traditional finance demands.

Bitcoin ETFs previously demonstrated how institutional access drives capital inflows at scale. However, Bitcoin had already matured before ETF approval.

Sui remains in earlier development stages, meaning institutional capital entering now carries greater relative impact. Fixed supply dynamics combined with increasing demand create favorable conditions for long-term growth.

The institutional validation extends beyond price speculation. Regulatory recognition attracts enterprise developers and commercial applications.

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Projects building on blockchains with clear compliance pathways face fewer legal uncertainties. This regulatory clarity reduces friction for businesses considering blockchain integration.

Capital markets now view Sui as legitimate infrastructure rather than experimental technology. The shift reflects broader industry maturation as crypto moves from speculative trading toward functional utility.

Traditional finance involvement brings stability and resources that support long-term ecosystem development.

Technical Architecture Removes Adoption Barriers

Sui addresses two critical obstacles that have prevented mainstream adoption. The platform eliminates seed phrase requirements through zkLogin technology developed by partners, including Human.tech’s Wallet-as-a-Protocol and Ika.

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Users authenticate with Google accounts, Face ID, or phone numbers while maintaining full asset control. Zero-knowledge authentication verifies identity without exposing private keys to third parties.

This onboarding simplification removes the most intimidating aspect of cryptocurrency usage. Traditional wallet setup requires writing down twelve-word phrases and understanding address systems.

Sui reduces this process to familiar login methods users already trust. The technology breakthrough makes blockchain accessible without requiring technical education.

The underlying architecture also delivers performance improvements. Sui employs an object-centric model where assets exist as independent objects rather than account balances.

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Tokens, NFTs, and smart contracts process simultaneously instead of sequentially. This parallel execution prevents network congestion even during high-demand periods.

Transaction fees remain under one cent with finality achieved in approximately 400 milliseconds. The Mysticeti consensus upgrade further reduced latency.

Move programming language adds security advantages by treating assets as resources that cannot be copied or accidentally deleted.

This design eliminates common exploit categories, including reentrancy attacks. The combination of usability and technical performance positions Sui for practical application deployment across finance and gaming sectors.

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Crypto World

Onchain Public Benefits are the Future but Challenges Remain, CEO Says

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Government, Bonds, RWA, RWA Tokenization

Blockchain technology is an effective medium for administering social benefit programs, but key compliance challenges remain, according to Julie Myers Wood, CEO of compliance and monitoring consulting firm Guidepost Solutions.

Guidepost Solutions advised the Republic of the Marshall Islands’ government on a regulatory compliance and sanctions framework for its USDM1 bond, a tokenized debt instrument issued by the government, backed 1:1 by short-term US Treasuries.

The Marshall Islands government launched a Universal Basic Income (UBI) program in November 2025 that distributes quarterly benefits to citizens directly through a mobile wallet. Wood told Cointelegraph:

“Any benefit that is currently being distributed through analog means should be explored for a digital delivery option for several reasons. Digital delivery speeds up the process and can provide an auditable trail for provisioning and expenditures.”

Government, Bonds, RWA, RWA Tokenization
The market for non-US tokenized government debt instruments continues to grow. Source: RWA.XYZ

Several governments are exploring tokenized debt instruments and administering social benefit programs onchain to eliminate settlement delays and costly transaction fees inherent in traditional finance by disintermediating the issuing and clearing process.

Related: UK government appoints HSBC for tokenized bond pilot

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Regulatory compliance and sanctions challenges remain as the tokenized bond market grows

The cost reduction and near-instant settlement times for tokenized bonds and other onchain instruments democratize access to the financial system for individuals who lack access to traditional banking infrastructure.

However, anti-money laundering (AML) requirements and sanctions compliance are two of the biggest regulatory risks for governments issuing onchain bonds to the public, Wood told Cointelegraph.

Governments issuing tokenized bonds must also collect know-your-customer (KYC) information to ensure that funds are directed to the proper recipients, she added.

The tokenized US Treasury market grew by over 50x since 2024, according to data from crypto analysis platform Token Terminal.

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Government, Bonds, RWA, RWA Tokenization
The tokenized US Treasury market has grown by over 50x since 2024. Source: Token Terminal

The tokenized bond market could surge to $300 billion, according to a forecast from Lamine Brahimi, co-founder of Taurus SA,  an enterprise-focused digital asset services company.

Reduced settlement times, transaction costs and asset fractionalization, which allows individuals to purchase fractions of a financial asset, all expand investor access to the global financial system, Brahimi told Cointelegraph.

Magazine: Will Robinhood’s tokenized stocks REALLY take over the world? Pros and cons