Will institutions follow Bitcoin onto other chains?

The occurrence of spot Bitcoin (BTC) exchange-traded funds (ETFs) and large BTC treasury companies marked different measurement successful the organization adoption of crypto.

US-traded spot Bitcoin ETFs captured $518 cardinal connected Sept. 29 and person accumulated $57.3 cardinal successful nett flows since their motorboat successful January 2024, according to Farside Investors data.

BlackRock’s iShares Bitcoin Trust (IBIT) crossed $80 cardinal successful assets by July 2025, becoming the fastest ETF to scope that threshold successful conscionable 374 trading days. Adding to the stellar performance, names specified arsenic Harvard Management Co. and the Abu Dhabi sovereign wealthiness money Mubadala disclosed investments successful Bitcoin done IBIT.

The integer plus treasury question expanded successful tandem with the adoption of ETFs. Strategy accrued its Bitcoin holdings to 649,031 BTC worthy $72.67 cardinal arsenic of Sept. 29. Meanwhile, Metaplanet up-sized its stock offering to $1.4 cardinal successful September to money assertive Bitcoin acquisitions, targeting 210,000 BTC by 2027.

Institutions present look a prime betwixt acold retention and output generation. Max Gokhman, lawman CIO astatine Franklin Templeton Investment Solutions, noted that output is simply a large operator for organization adoption of crypto.

And the SEC is clearing pathways for output done regulated products. On Aug. 6, a staff statement confirmed that liquid staking tokens bash not represent securities by default, portion the Sept. 17 generic listing standards expedited crypto ETF approvals.

As much altcoin ETFs are acceptable to motorboat successful the US, perchance offering yields done staking, institutions volition summation vulnerability to the returns that crypto has to offer. This alteration mightiness interaction however Wall Street sees Bitcoin.

Bitcoin options fragment crossed chains

Bitcoin is scattered crossed 365,958.79 BTC successful synthetic forms totaling $41.8 cardinal arsenic of Sept. 30, according to Bitcoin Layers.

As Bitcoin does not person autochthonal astute declaration capabilities, the thought of a synthetic token, commonly referred to arsenic a wrapper, is to let the usage of BTC successful DeFi protocols built connected different blockchains.

Babylon leads autochthonal staking with 58,271.77 BTC, generating a 0.29% APR done a self-custodial protocol that secures proof-of-stake chains.

Using Babylon’s infrastructure, chains and applications tin pat a information furniture maintained by BTC staking.

Lombard’s LBTC token transforms Bitcoin into a liquid staking plus with 0.82% APY and $1.3 cardinal successful full worth locked (TVL), compatible with Ethereum, Base, Solana, BNB Smart Chain, Katana, Sonic, Starknet, and Sui done autochthonal Chainlink and canonical span integrations.

Threshold operates tBTC v2 crossed Ethereum, Starknet, Sui, and MezoChain with 6,335.31 tBTC bridged and $717.7 cardinal successful TVL.

Solv Protocol offers its solvBTC crossed 12 chains, including Arbitrum, Mantle, and the Bitcoin mainnet, with $1.7 cardinal successful full worth locked (TVL).

Meanwhile, b14g offers an mean of 5% APR done dual-staking mechanisms that harvester BTC with autochthonal protocol tokens, crossed a $300 cardinal TVL.

Zeus Network bridges Bitcoin to Solana via the zBTC wrapper, with $58.7 cardinal successful TVL utilizing Multi-Party Computation for trustless cross-chain interoperability. It offers 4.52% APY connected staking via Fragmetric.

Thorchain facilitates autochthonal Bitcoin swaps for assets crossed antithetic chains with $74 cardinal locked. Bitcoin bridges processed $1.87 cardinal successful September 2025.

Regarding chains with the largest amounts of wrappers, Ethereum holds 178,458.67 BTC arsenic of Sept. 30, followed by BNB Smart Chain astatine 24,082.67 BTC and Base astatine 21,647.85 BTC.

Besides the wrapper domination successful established blockchains, Lightning Network presents itself arsenic a important obstruction for BTC usage.

Lightning maintains $438 cardinal successful TVL contempt a 20% diminution successful nationalist capacity from 5,400 BTC successful precocious 2023 to 4,200 BTC by August 2025.

Coinbase reported that 15% of Bitcoin withdrawals were routed done Lightning by mid-2025, and CoinGate documented that Lightning accounted for 16% of Bitcoin orders successful 2024, compared to 6.5% 2 years prior.

Additionally, Tether deployed USDT implicit Lightning via Taproot Assets successful January 2025, enabling dollar-denominated payments without locking BTC successful channels.

Practical difficulties

Despite the plurality of networks and wrappers that institutions could usage to adhd composability to Bitcoin if they privation to, the cardinal constituent of entree remains done ETFs.

Using BlackRock’s IBIT S-1 filing arsenic an example, the papers specifies that Coinbase Custody Trust Company holds Bitcoin successful segregated acold retention wallets with multi-signature authentication, abstracted from each different Coinbase assets.

In January 2025, BlackRock filed an amendment to IBIT’s operation to let in-kind instauration and redemption, requiring Coinbase Custody to process withdrawals to nationalist blockchain addresses wrong 12 hours.

Currently, determination is constricted country to incorporated output pathways into Bitcoin ETFs, which would impact exploring the DeFi ecosystem utilizing BTC.

Additionally, the Financial Action Task Force’s Travel Rule mandates fiscal institutions and Virtual Asset Service Providers to transmit originator and beneficiary identifying accusation with virtual currency transactions.

This modular requires end-to-end transparency to assistance instrumentality enforcement and mitigate fiscal transgression risks. ETF issuers indispensable support segregated custody with regulated entities that are susceptible of producing audit trails that fulfill the question regularisation requirements.

Wrapped Bitcoin protocols present spot assumptions that struggle with organization custody standards.

Threshold’s tBTC relies connected decentralized node operators to support the span betwixt Bitcoin and Ethereum, creating a multi-signature custodial exemplary wherever nary azygous entity controls funds.

Although this is affirmative from a decentralization perspective, it introduces a information dependency connected the integrity of the validator set. Lombard utilizes Babylon’s Bitcoin Staking Protocol, combined with a consortium exemplary for custody, which distributes hazard crossed aggregate parties.

Again, determination is an effort to decentralize azygous points of failure; however, this adds coordination requirements that complicate audit procedures.

A Bitcoin ETF holding LBTC connected Base would look scrutiny connected Optimism’s fraud-proof system, Base’s sequencer centralization, and the bridge’s oracle dependencies.

Each wrapped BTC variant trades disconnected information assumptions. BitGo’s wBTC utilizes centralized custody with ineligible agreements, whereas Threshold’s tBTC distributes custody crossed validators, who indispensable support uptime and adhere to honorable behavior.

These layered risks multiply audit surfaces beyond what segregated acold retention presents.

Yield profiles and cost-benefit

Babylon’s 0.29% APR connected staked Bitcoin compares unfavourably to Ethereum’s 3.2% staking output oregon Solana’s 7.1% APY disposable done liquid staking derivatives.

Lombard’s 0.82% instrumentality requires institutions to judge vulnerability to 13 antithetic blockchain networks, each with chiseled information models and imaginable nonaccomplishment modes.

These examples uncover the situation that a 1% output vantage connected a 5% Bitcoin allocation contributes conscionable 5 ground points to full portfolio returns.

Institutions mightiness find insufficient compensation for introducing span risk, oracle dependencies, and cross-chain colony complexity.

Franklin Templeton’s Gokhman observed that institutions progressively presumption Bitcoin arsenic a cyclical, high-beta hazard plus that correlates with accepted fiscal markets arsenic organization adoption grows.

This framing suggests that portfolio managers similar to abstracted their Bitcoin holdings from output generation, maintaining BTC arsenic a axenic vulnerability play portion sourcing returns from assets with much established DeFi infrastructure.

An instauration could clasp Bitcoin done IBIT’s segregated acold retention portion deploying superior into Ethereum ETFs that volition perchance connection staking yields done proven liquid staking tokens approved by the SEC’s August 2025 guidance.

Dividing vulnerability requires allocating superior crossed aggregate positions but preserves custody clarity and simplifies compliance reporting.

The alternate of bridging Bitcoin to entree DeFi yields forces institutions to measure whether Threshold’s node operators oregon Lombard’s decentralized consortium provides equivalent information to Coinbase Custody’s federally regulated acold storage.

Each span introduces a caller counterparty, and each destination concatenation adds different hazard aboveground that concatenation hazard committees indispensable review. The fragmented liquidity crossed 365,958 BTC, dispersed crossed antithetic protocols and chains, compounds this complexity, arsenic nary azygous venue offers the extent that institutions necessitate for introduction and exit without marketplace impact.

In conclusion, Bitcoin layer-2 and alternate furniture protocols connection method solutions for output generation. However, it is up to regulators to find a mode to accommodate these paths into regulated products, and it is up to institutions to determine whether nonstop vulnerability is worthy the risk.

The station Will institutions travel Bitcoin onto different chains? appeared archetypal connected CryptoSlate.