On 10 January 2024, the SEC approved 11 spot Bitcoin ETFs simultaneously. Within 100 days, these funds collectively attracted over $50 billion in assets under management, making the Bitcoin ETF launch the most successful in ETF history by inflow volume. Six months later, the SEC approved spot Ethereum ETFs. These approvals did not create digital asset markets. Those markets had existed since 2009. What the approvals did was connect digital asset markets to the institutional distribution infrastructure (brokerage accounts, retirement plans, model portfolios) that manages the majority of global wealth. The blockchain market underpinning these assets is valued at $31.18 billion in 2025, per Fortune Business Insights, with a projected 36.50% CAGR to $577.36 billion by 2034.
The Structure of Digital Asset Markets Before 2024
Before the ETF approvals, digital asset markets operated largely outside traditional financial infrastructure. Investors bought and sold crypto on specialised exchanges (Coinbase, Binance, Kraken) that operated independently of the brokerage systems used for stocks and bonds. Institutional investors who wanted Bitcoin exposure had limited options: the Grayscale Bitcoin Trust (GBTC), which traded at persistent premiums or discounts to net asset value, or direct custody through specialised providers like Fidelity Digital Assets.
This separation created friction. A financial advisor managing a client’s portfolio could allocate to stocks, bonds, real estate, and commodities through a single brokerage platform, but adding Bitcoin required opening an account on a crypto exchange, managing separate custody, and handling different tax reporting. Most advisors did not bother. As a result, retail crypto adoption significantly outpaced institutional adoption for over a decade.
Data from Chainalysis’s 2024 Global Crypto Adoption Index shows that emerging markets in South and Southeast Asia continue to lead grassroots cryptocurrency adoption, driven by remittance use cases and limited access to traditional banking services.
According to CoinGecko’s 2024 annual crypto report, total cryptocurrency market capitalisation exceeded $3.5 trillion by the end of 2024, reflecting renewed institutional interest following spot ETF approvals in the United States.
The market itself was fragmented. Prices for the same asset varied across exchanges by 1% to 3% at times, creating arbitrage opportunities but also inefficiency. Liquidity was concentrated on a handful of offshore exchanges with limited regulatory oversight. The collapse of FTX in November 2022, which destroyed $8 billion in customer assets, demonstrated the risk of this structure.
How ETFs Changed Market Structure
Spot Bitcoin and Ethereum ETFs integrated digital assets into existing financial plumbing. An investor can now buy Bitcoin through the same Fidelity, Schwab, or Vanguard account they use for index funds. A financial advisor can include Bitcoin in a model portfolio without separate custody arrangements. A pension fund can gain crypto exposure through a regulated, audited product with daily NAV calculations and standard reporting.
BlackRock’s iShares Bitcoin Trust (IBIT) became the fastest ETF to reach $10 billion in assets, surpassing the previous record held by JEPI (an options-income ETF). Fidelity’s Wise Origin Bitcoin Fund (FBTC) attracted comparable inflows. The combined effect was a structural shift in who holds Bitcoin: from predominantly retail investors and crypto-native funds to a broader mix that includes registered investment advisors, family offices, and institutional allocators.
Grayscale converted its Bitcoin Trust to an ETF format, eliminating the persistent discount that had frustrated investors. The conversion triggered initial outflows as investors who had been locked in at a discount exited, but it also normalised GBTC as a standard financial product.
The ETF approval also improved price discovery. With institutional market makers (Jane Street, Virtu Financial, Citadel Securities) participating in ETF creation and redemption, the bid-ask spread on Bitcoin tightened significantly. Price discrepancies between exchanges narrowed as institutional arbitrage activity increased.
Tokenised Assets as a New Market Category
Beyond cryptocurrency, blockchain is creating entirely new categories of digital assets through tokenisation. Tokenised real-world assets (RWAs) convert ownership in traditional financial instruments into blockchain tokens that can be issued, traded, and settled on distributed ledgers.
The tokenised RWA market (excluding stablecoins) exceeded $5 billion by late 2024. BlackRock’s BUIDL fund held over $500 million in tokenised US Treasuries on Ethereum. Franklin Templeton’s OnChain fund operated on Stellar and Polygon with over $400 million. These are not crypto-native products. They are traditional money market funds delivered through blockchain infrastructure, with the same underlying assets and the same investment objective.
The advantage of tokenisation for investors is access and efficiency. A tokenised fund can be subscribed to and redeemed 24/7, compared to the T+1 or T+2 settlement cycle for traditional funds. Minimum investment thresholds can be reduced because tokens are divisible. Hamilton Lane tokenised a portion of its direct equity fund with a minimum investment of $20,000, compared to the $5 million minimum for the traditional version.
For issuers, tokenisation reduces distribution costs. A bond issued on a blockchain settles on the same day it is issued, compared to the standard five-day cycle. Post-trade processing (clearing, custody, reconciliation) is automated by smart contracts, reducing the operational costs that currently account for $17 to $24 billion annually in the global securities industry.
Market Infrastructure for Digital Assets
83% of financial institutions are exploring or deploying blockchain, per Coinlaw. Their digital asset market activity requires specialised infrastructure.
Custody is the foundation. BNY Mellon, Fidelity, State Street, and Coinbase provide institutional custody for digital assets. These custodians must meet the same regulatory standards as traditional securities custodians, including asset segregation, insurance, and operational controls.
Market making and liquidity provision have been institutionalised. Jump Crypto, Wintermute, and GSR provide liquidity on both centralised and decentralised exchanges. These firms use the same quantitative strategies they employ in traditional markets, adapted for 24/7 crypto trading.
Data and analytics services have matured. Kaiko provides institutional-grade market data for digital assets. Chainalysis and Elliptic provide blockchain analytics for compliance and surveillance. These services give institutional participants the same data infrastructure they rely on in traditional markets: order book depth, trading volume analytics, and transaction monitoring.
Clearing and settlement are evolving. DTCC’s Project Ion tests blockchain-based settlement for US equities. Eurex Clearing, Europe’s largest derivatives clearinghouse, has explored blockchain-based collateral management. The integration of blockchain-based settlement into existing market infrastructure is a multi-year process, but the technical feasibility has been demonstrated.
Regulatory Frameworks Shaping the Market
The EU’s MiCA regulation, effective December 2024, provides a comprehensive framework for digital asset markets across all 27 member states. MiCA covers exchange licensing, stablecoin issuance, custodial services, and investor protection. Companies operating in the EU now have a single set of rules to follow.
The United States remains fragmented. The SEC regulates securities tokens. The CFTC regulates commodity tokens (Bitcoin). State regulators oversee money transmission. The absence of comprehensive federal legislation means that digital asset market participants must navigate multiple overlapping jurisdictions.
Hong Kong, Singapore, and the UAE have each developed digital asset regulatory frameworks designed to attract institutional market participants. These jurisdictions compete for digital asset business by offering regulatory clarity that the US currently lacks.
North America holds 43.80% of the global blockchain market, per Fortune Business Insights. The region’s share of digital asset market activity is even higher, driven by the concentration of institutional investors, market makers, and trading infrastructure providers. The ETF approvals of 2024 connected digital asset markets to this institutional base. The tokenisation wave now underway will determine whether blockchain transforms not just how digital assets are traded but how all financial assets are issued, settled, and held.
