The institutional acceptance of cryptocurrencies worldwide has accelerated significantly in recent years, developing in tandem with clearer regulations. In a recent discussion, BlockFills CEO Nick Hammer delves into the reasons behind the increasing institutional usage of crypto and highlights the latest products emerging to meet this demand.
Current Trends in the Digital Asset Space
We are witnessing heightened involvement from institutional players, such as hedge funds, family offices, and asset managers, which underscores the growing credibility and maturity of the digital asset space. This surge in institutional activity brings substantial capital, enhanced liquidity, and stability to the market, while also driving mainstream acceptance and fostering necessary regulatory clarity.
Globally, governments and regulators are establishing more defined frameworks with a focus on investor protection. This development helps build trust and ensures compliance across various jurisdictions, impacting firms like ours as we navigate the global regulatory landscape and expand offices in South America and the Middle East. Notably, BlockFills has a London-based affiliate, Basis Capital Markets UK Ltd, regulated by the Financial Conduct Authority (FCA). The progression towards regulatory certainty has proved beneficial for key players operating in the space.
Additionally, decentralized finance (DeFi) continues to grow, providing decentralized alternatives to traditional financial products such as lending, borrowing, and trading. This evolution promotes greater financial inclusion, efficiency, and transparency. Central banks are also exploring or developing their own digital currencies, responding to the rise of cryptocurrencies and stablecoins, which could significantly influence the future of money and contribute to a more digitized financial ecosystem.
The utilisation of stablecoins has also gained traction, with companies like Stripe introducing new payment options that allow customers to transact with U.S. businesses using USDC stablecoin. This growing trend is reshaping asset trading and storage methodologies.
Why More Institutions Are Adopting Crypto
Recent regulatory movements have bolstered confidence among institutional traders venturing into the digital asset realm. The U.S. has implemented a strategic Bitcoin Reserve policy at federal and state levels, the SEC and CFTC have formed a joint crypto regulation advisory committee, and several crypto exchange-traded funds (ETFs) have been approved, with more applications, including Bitwise’s for an XRP ETF, under consideration.
Institutional custody solutions for cryptocurrencies have further enhanced confidence in this space. BlockFills has partnered with leading players that heavily invest in custody solutions, insurance, and regulatory compliance to protect assets from hacking and theft, as ensuring long-term sustainability is paramount.
Moreover, the trend of tokenizing traditional financial products, such as stocks, bonds, and commodities, attracts institutional and professional investors. This fractional ownership and enhanced liquidity offer unique opportunities beyond conventional investment vehicles.
Evaluating Product Opportunities in a Maturing Market
BlockFills’ offerings of both spot and derivatives allow for unique trading opportunities, facilitating traders in exploring diverse strategies. Our OTC desk provides customizable products with a wide variety of underlying digital assets, including BTC, ETH, SOL, XRP, USDT, LTC, BCH, and more, rather than being limited to the major coins.
Legacy products and technologies may pose constraints that hinder the evolution of digital assets. Crypto’s need for same-day settlement, 24/7 markets, and non-fiat collateral drives BlockFills to seek innovative solutions that meet the requirements of digital asset traders while leveraging traditional frameworks.
Furthermore, BlockFills offers both cash-settled and physically delivered products catering to various professional and institutional traders. Our turnkey solutions enable firms to quickly establish themselves in the digital asset sector to avoid missing out on opportunities.
The digital asset landscape is unique, having been developed by retail investors before transitioning to accommodate institutional markets. We credit the initial innovators in the retail sector and strive to incorporate their pioneering spirit into our product development.
The Launch of the BlockFills CoinDesk 20 Options Market
BlockFills provides institutional-grade liquidity to the CoinDesk 20 Index, which evaluates the performance of leading digital assets using a capped market capitalization weighted methodology to ensure diversification. Additionally, we have launched the BlockFills CoinDesk 20 Options Market, responding to the demand for diverse and tradeable digital asset products beyond BTC and ETH ETFs. We have listened to qualified institutional market participants seeking a foundational reference index for trading and measuring performance, and we are excited to deliver a solution.
Notably, prominent digital asset manager and multi-strategy crypto hedge fund, Hyperion Decimus, executed the first transaction of this product in January.
Looking Ahead at BlockFills
We are strategically collaborating with partners to enhance service levels for digital asset trading. Recently, we teamed up with CQG, a leading global provider of high-performance technology solutions, to offer reliable pricing and deep liquidity to their vast clientele. Our market participants will benefit from access to CQG’s institutional-grade technology and trading tools.
Additionally, we are expanding our partnerships with key industry players such as custody provider Fordefi, London-based banking group BCB, CQG, CoinDesk Indices, and others to enhance the digital assets experience further.
BlockFills will also be launching global offices in Dubai, Brazil, and the U.K. For those interested in more information, please visit BlockFills.com.
Disclosure:
*Derivative Products available to Qualified Counterparties Only. For U.S. Persons, the client is an Eligible Contract Participant (“ECP”) as defined in Section 1a(18) of the Commodity Exchange Act and related guidance. Non-U.S. Persons must qualify as an Eligible Professional Client.
The information in this article is not to be construed as an offer to sell or a solicitation or an offer to buy contracts for difference (CFD), cryptocurrencies, futures, foreign exchange, or options on the aforementioned. All information contained herein is believed to be accurate, but Reliz Ltd makes no representation as to the accuracy or completeness of any data, statistics, studies, or opinions expressed and it should not be relied upon as such. The risks of trading can be substantial, and each investor must consider whether this is a suitable investment. Those acting on this information are responsible for their own actions.
Authors’ views and opinions are their own and not associated with CoinDesk Indices. The interview was conducted by CoinDesk Indices and is not associated with CoinDesk editorial.
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