Author's Viewpoint: Function CEO Thomas Chen

Bitcoin exchange-traded funds (ETFs) solve the access issue but remain passive. What is now needed is a trustworthy, auditable, institutional-grade approach to convert Bitcoin exposure into scalable returns.

Bitcoin is evolving from a digital store of value into productive capital. Continuing to view Bitcoin (BTC) as digital gold—long-term storage for appreciation—misses its true opportunity as a reserve asset in the digital age.

Bitcoin is not just a store of value; it is programmable collateral. It is productive capital. It is the foundational layer for institutional participation in on-chain finance.

The clearing event on October 10 occurred due to the inability to effectively execute core risk management functions. On the other hand, this event also proved that Bitcoin yield projects emphasizing security and simplicity will prevail. As volatility increases, Bitcoin yield projects see increased arbitrage opportunities in the market as spreads widen. Market-neutral strategies without significant leverage can withstand and actually outperform the market as they profit from market dislocations.

Composable, capital-efficient infrastructure has developed, and there are now transparent and auditable yield pathways. Institutional deployment frameworks have matured both technically and legally. However, the Bitcoin held by most institutions has the potential to provide higher yields.

The strategy management team can skillfully acquire BTC. Other BTC digital asset pools may not be able to do this. Copying trading strategies is not a strategy. Ultimately, the BTC accumulation phase will end, and the BTC deployment phase will begin.

In traditional finance (TradFi) markets, allocators do not indefinitely park their assets. They rotate, hedge, optimize, and continuously adjust to maximize returns (risk-adjusted). However, for Bitcoin, allocators are still in the accumulation phase, but eventually, like other assets, they will need to start making Bitcoin work.

What does this mean for allocators? It means making Bitcoin operate like productive capital within a known and reliable framework. Consider short-term loans backed by substantial collateral. Additionally, market-neutral base strategies do not rely on Bitcoin price appreciation, providing liquidity on reviewed and compliant institutional platforms, as well as conservative or low-risk covered call programs with clearly preset risk limits.

Each pathway should be transparent and easy to audit. It should be configured based on duration, counterparty quality, and liquidity. The goal is not to maximize returns; rather, it is to optimize returns to hedge volatility within authorized limits. If returns are too low relative to the risk profile, the risk/return of capital deployment is not worth it for many, leading some liquidity providers (LPs) to hold.

What we need is an operational model that allows us to use it without violating compliance standards while keeping it simple. Once yields are secure and standardized, the threshold will shift, avoiding the burden of idle capital.

By Q4 2024, there will be over 36 million active cryptocurrency mobile wallets globally. This is a record high and a sign of broader ecosystem participation, with retail learning to trade, lend, stake, and earn yields. A similar situation is possible for institutions holding more capital and operating under strict authorizations. Many still view Bitcoin merely as a store of value and have yet to fully realize its potential—and do so in a fully compliant manner.

According to a 2025 survey, 83% plan to increase cryptocurrency allocations among institutional investors. However, allocation growth can only reach its full potential when operational requirements are met and supported by solid infrastructure.

The gears are already in motion. Arab Bank Switzerland and XBTO are launching Bitcoin yield products, and some centralized exchanges are preparing to launch their own yield-focused Bitcoin funds for institutional clients, providing structured BTC income pathways.

These are early signals, not endorsements. What matters is the direction forward: whether yields are delivered through credible pathways, whether assets are segregated, and whether there is a clear downside framework. Institutions want low-volatility income from on-chain mechanisms but wrapped in controls they already understand.

What is happening here is not speculation; it is foundational. Bitcoin is being built into programmable infrastructure, increasing yield pathways that go beyond its strong reputation as "digital gold." It is no longer a niche interest; it is actively pursued by institutions seeking liquidity and low-volatility income strategies—this time on-chain.

The visible maturation of Bitcoin is occurring. This is indeed a major structural trend, with productive assets winning allocations. What the market now needs is not more access; rather, it is more ways to use Bitcoin.

Upgrading standards to performance means defining success in measurable and quantifiable terms. Consider achieving yields against implied yields, slippage, and target drawdown tolerances—along with financing costs, collateral health, and liquidity timelines under stress.

When tools exist to productively deploy BTC, following institutional custody, risk management, and compliance, standards will upgrade and shift towards performance. When inaction becomes the exception, Bitcoin's role in the economy shifts from passive allocation to productive, yield-generating capital. Allocators will no longer be able to remain idle.

Institutions that rapidly implement these standard changes will capture the largest share of liquidity, structure, and transparency offered by composable infrastructure.

The window to define best practices has opened.

Now is the time to formalize policies, initiate small, auditable scalable projects, and create not just access. It is time to convert exposure into deployment in a productive, transparent, and fully compliant manner, fully realizing Bitcoin's potential. Author's Viewpoint: Function CEO Thomas Chen

Related: Reportedly, a Nordic bank that once rejected cryptocurrency is about to launch a Bitcoin (BTC) ETP

Original: “Bitcoin (BTC) is Infrastructure, Not Digital Gold”

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