A significant shift is underway in institutional attitudes towards generating yield on Bitcoin holdings, driven by a demand for familiar, low-risk strategies and leading to the launch of several major new products. According to Thomas Chaffee, co-founder of staking infrastructure provider GlobalStake, institutions are no longer willing to accept the smart-contract risk and opaque strategies that characterized earlier yield attempts. "The behavior change we’re seeing isn’t institutions chasing yield," Chaffee told CoinDesk. "It’s institutions finally engaging once the strategies, controls, and infrastructure look like something they can actually deploy capital into at scale."
This renewed interest follows the collapse of several high-profile yield services during the 2022 market downturn, most notably Celsius Network. Institutions are now gravitating towards "fully collateralized, market-neutral approaches that resemble traditional financial strategies" used by hedge funds and corporate treasuries.
In a landmark partnership, Kraken Institutional and Bitwise Asset Management have officially launched the 'Bitwise Custom Yield' strategy. This managed service is designed to generate yield on cryptocurrency holdings, initially focusing exclusively on Bitcoin (BTC) through a covered call options approach. Bitwise manages the portfolio and yield-generation methodology, while Kraken provides custody, trade execution, and risk management.
The product directly addresses a critical gap for institutional investors who, after the 2024 spot Bitcoin ETF approvals, hold significant BTC but lack regulated, secure avenues for passive income. The covered call strategy involves holding Bitcoin and selling call options against it, collecting premiums as yield while capping some upside potential. Kraken's integrated platform offers transparent reporting, creating a turnkey solution for risk-averse allocators like pension funds and family offices.
Simultaneously, GlobalStake has unveiled its Bitcoin Yield Gateway, a platform aggregating multiple third-party bitcoin yield strategies behind a single compliance layer. Chaffee explained the company expects roughly $500 million in bitcoin to be allocated within three months during the gateway's first-quarter rollout, sourced from custodial partners and clients including family offices and hedge funds.
Other firms like Babylon Labs are approaching from the infrastructure layer, developing systems to use native bitcoin as non-custodial collateral. Richard Green, director of Rootstock Institutional, echoed the sentiment, stating professional investors now want their digital assets to "work as hard as possible" within their risk mandates, viewing idle bitcoin as a "pot just sitting there" that needs to add yield.
