The 2024 U.S. election cycle, especially the emergence of “the first crypto president” Trump, is undoubtedly the best publicity model for digital assets - as the dust of Trump’s second term has settled, Bitcoin has also It has continuously exceeded US$70,000, US$80,000, and US$90,000, now just a step away from the symbolic $100,000 milestone.

Against this background, the global market’s recognition of digital assets has increased significantly. Just imagine, if traditional funds with huge amounts of money start to turn to Web3, then through what channels are these “Old Money” representing mainstream institutions and high-net-worth individuals most likely to deploy digital assets?

The “Trump Trade” and the Institutionalization Wave of Digital Assets

During the 2024 presidential election, Donald Trump pledged a series of policies supporting Web3 and digital assets, such as integrating Bitcoin into national reserves and loosening industry regulations. While these moves may carry political motivations, they undoubtedly provide a critical framework for understanding the direction of the digital asset industry over the next four years.

In the coming years, the expected regulatory easing across executive, legislative, and oversight bodies under the “Trump Trade” will be particularly significant in terms of compliance and market legitimacy. This period is poised to become a key window for observing the institutionalization process of the digital asset market.

Notably, as early as May 22, the 21st Century Financial Innovation and Technology Act (FIT21 Act) was passed in the House of Representatives by a 279–136 vote margin. This act aims to establish a new regulatory framework for digital assets. If it also passes the Senate, it will provide the industry with enforceable and clear regulations, substantially reducing regulatory uncertainty, promoting market legitimacy, and attracting more institutional capital into digital assets, thereby driving the wave of institutionalization.

Source: FIT21 Act

Under these circumstances, mainstream global financial institutions and high-net-worth individuals are gearing up for action. In Pennsylvania, representatives Mike Cabell and Aaron Kaufer have introduced the Bitcoin Strategic Reserve Act to the state legislature, proposing to allow the state treasurer to invest in Bitcoin, digital assets, and crypto ETFs.

According to SoSoValue data, U.S. Bitcoin spot ETFs surpassed $5 billion in daily trading volume multiple times after November 6, peaking at $8 billion on November 13, an 8-month high. Meanwhile, the total weekly trading volume for three Bitcoin spot ETFs in Hong Kong exceeded HKD 420 million during the same period, a week-on-week growth of over 250%. Notably, the ETF launched by OSL, in collaboration with ChinaAMC (Hong Kong) and Harvest International, accounted for approximately 86% of this total, reaching HKD 364 million.

Source: SoSoValue

Unlike traditional small-scale trading services aimed at retail users, global institutional investors and high-net-worth individuals demand higher levels of compliance, security, and efficient services. For them, allocating digital assets is not just a strategic shift in investment but also a tactical challenge to overcome compliance and security hurdles.

Against this backdrop, new approaches for institutional services are quietly emerging, and some innovative strategies are beginning to take shape. For instance, on November 18, Hong Kong-licensed digital asset company OSL announced a collaboration with Fosun Wealth Holdings and ChinaAMC to launch a virtual asset ETF physical subscription service. This service allows investors to directly subscribe to ETF products using their existing digital currencies, without first having to sell and convert them into cash.

This means that, leveraging OSL’s blockchain infrastructure, Fosun can establish a digital asset trading system with strict KYC/AML processes and intelligent risk control mechanisms. Institutional investors or high-net-worth users can, within a compliant framework, directly convert their BTC or ETH into corresponding ETFs. These ETFs are then managed by professional custodians like OSL, enabling users to benefit from secure custody, insurance coverage, and compliance.

In short, service providers capable of delivering compliant, secure, and transparent solutions for managing, trading, and paying with digital assets will become the focal point of market competition. This highlights the tremendous opportunities for To-B service providers, as the growing demand for digital asset allocation from financial institutions and high-net-worth clients will drive the development of related services, particularly in the fields of digital asset custody, OTC trading, asset tokenization, and payment solutions.

The To-B market is on the verge of a breakout, with players racing to establish an early foothold. The question remains: how will these new demands for digital assets reshape the structure of the entire industry?

What Are The Key Needs Faced by The Wave of Digital Asset Institutionalization?

To understand the core challenges and requirements for “Old Money” entering the digital asset market, we can break it down into four main areas of focus for traditional financial institutions and high-net-worth individuals:

Comprehensive compliance solutions for financial institutions (Omnibus); Tokenization of Real-World Asset (RWA)/Asset on-chain; Custody/OTC services; PayFi solutions.

1. Comprehensive Compliance Solution for Financial Institutions (Omnibus)

First, let’s consider traditional financial institutions. Starting this year, virtual asset ETF service providers and traditional retail brokers have been increasingly entering the digital asset trading space. Moreover, an expanding number of investors, financial institutions, publicly listed companies, and family offices are actively exploring compliant channels to allocate digital assets.

However, for these institutions, entering the digital asset market is no easy task. The greatest challenges lie in deployment time and cost. Compared to traditional financial products, the decentralized nature and technical complexity of digital assets require institutions to dedicate significant time to integrating systems, managing risks, and building compliance frameworks.

Specifically, constructing a compliance system that meets regulatory requirements—particularly robust KYC and AML frameworks—not only demands substantial technical and financial resources but also requires the ability to adapt to the rapidly evolving digital asset market and shifting compliance mandates. These significant time and cost investments are often the primary obstacles preventing institutions from stepping into the digital asset space.

A solution that could help financial institutions quickly integrate compliant frameworks and tools, while providing clients with secure and compliant digital asset trading services tailored to diverse investment needs, would undoubtedly open the door to the digital asset market for these institutions.

Take OSL, a licensed exchange in Hong Kong, as an example. Its comprehensive compliance solution (Omnibus) includes stringent asset and transaction reviews, a robust KYC and AML system, and a secure asset management mechanism based on hierarchical private key management. This dramatically lowers the barriers for institutions to enter the digital asset market.

Moreover, this model of “professional expertise + security” in collaborative specialization fully leverages traditional financial institutions’ strengths in customer service and market promotion while relying on licensed entities’ expertise in compliance, technology, and risk control. The complementary advantages of this partnership promote deep integration between traditional finance and the digital asset ecosystem, providing a solid foundation for the institutionalization of digital assets.

2. Tokenization of Real-World Assets (RWA) / Asset On-chain

Although traditional assets such as stocks, bonds, and gold have high liquidity in the financial market, their transactions are still limited by problems such as long liquidation cycles, complex cross-border operations, and lack of transparency. Non-standardized assets, such as art and real estate, face even greater challenges in terms of liquidity and transaction efficiency.

Tokenization of assets not only enhances liquidity but also significantly improves transparency and transaction efficiency. Larry Fink, CEO of BlackRock, has stated that “the tokenization of financial assets will be the next step in the evolution of markets.” Tokenization can effectively prevent illegal activities, enable real-time settlement, and drastically reduce settlement costs for stocks and bonds.

According to the latest data from the RWA research platform rwa.xyz, the current global market size of tokenized real-world assets exceeds $13 billion. BlackRock’s projections are even more optimistic, estimating that the market value of tokenized assets will reach $10 trillion by 2030. This represents a potential growth of over 75 times in the next seven years.

However, despite recognizing the potential of asset tokenization, businesses and financial institutions face high technical barriers. Converting traditional assets into on-chain tokenized assets requires robust technical support and compliance assurances. Additionally, challenges related to liquidity, legal compliance, and technological security must be addressed.

In this context, licensed digital asset platforms serve as critical infrastructure, providing innovative support for traditional financial giants entering the realm of RWA tokenization. These platforms stand to directly benefit from the untapped liquidity of hundreds of billions of dollars within the traditional financial system. By using mature, compliant, secure, and transparent frameworks, these platforms can tokenize real-world assets (RWA), bringing them on-chain and unlocking their full liquidity potential.

3. Custody/OTC services

When considering digital asset investments, high-net-worth clients and institutional investors prioritize two key concerns: asset security and liquidity. These include risks such as losses caused by hacking or operational errors, as well as issues like insufficient market liquidity during large-scale transactions. Such challenges can lead to delayed trades or significant price slippage, ultimately reducing the efficiency of asset allocation.

According to statistics from Finery Markets, institutional digital asset OTC trading volumes saw a significant increase in the first half of 2024, surging by over 95% compared to the same period last year. The growth accelerated further in the second quarter, with client transaction volumes increasing by 110% year-over-year (compared to 80% in the first quarter).

Although OTC trading volumes for digital assets, at the billion-dollar level, still lag behind the trillion-dollar volumes seen on centralized exchanges (CEXs), the flexibility and confidentiality of OTC trading meet the needs of institutional investors conducting large-scale digital asset allocations. As regulatory frameworks continue to improve, OTC trading is expected to attract more investors, driving further growth of its volume.

Against this backdrop, institutions require a service system that delivers high security, efficiency, and liquidity to meet their needs in the digital asset space. On one hand, it must ensure the security of large-scale assets during storage and transactions. On the other hand, an efficient over-the-counter (OTC) network must not only meet the flexibility and privacy requirements of large-scale transactions but also leverage blockchain technology and banking networks to enable rapid settlement, significantly shortening transaction cycles.

Additionally, deep liquidity support is critical. By integrating market resources and institutional networks, service providers can offer stable pricing and diversified trading options, helping institutions enter the digital asset market smoothly.

4. Payment Finance (PayFi) Solutions

As digital assets gain traction, the demand for digital asset payments by enterprises and merchants has gradually increased, especially in areas with limited traditional banking infrastructure and in cross-border payment scenarios. Digital assets are viewed as a viable solution for providing cost-effective and efficient financial services in these challenging areas.

However, the complexity and potential risks associated with digital asset payments have made many traditional enterprises hesitant. For companies looking to adopt digital asset payment methods, the primary challenges include the complexity and compliance of payment processes. Additionally, the conversion between fiat and digital assets involves exchange rate fluctuations, taxation issues, and regulatory constraints in different countries, all of which add to the complexity and cost of payments.

In short, businesses and merchants need a backend system that can seamlessly integrate fiat and digital asset payments, reduce conversion costs, and ensure compliance and security throughout the payment process. To support cross-border operations, the solution must also support multi-currency payments and settlements.

Compliance digital asset platforms such as OSL actually have natural advantages when expanding these businesses. They can provide enterprises with a complete set of PayFi solutions through technical and compliance support to help them to address the challenges of digital asset payments:

First of all, this type of platform supports the seamless and instant exchange of legal currency and digital assets, and can realize multi-currency payment settlement on a global scale, simplifying the cross-border payment process. Secondly, platforms like OSL maintain strong partnerships with banks, ensuring compliance and stability during payment processes and mitigating risks such as account freezes, providing a reliable operating environment for businesses.

Through these key services, traditional institutions can enter the digital asset market efficiently and securely, while lowering the barriers to participation. This service ecosystem addresses core pain points such as asset security, liquidity, transaction efficiency, and investment optimization. It also provides institutions with comprehensive support for strategic positioning within the digital asset ecosystem.

Key Variables Shaping Institutional Services in the Digital Asset Industry

According to the latest statistics from Bank of America, the total market value of the global stock market and bond market is approximately US$250 trillion, and the overall size of other asset classes including real estate, art, gold, etc. is even more difficult to estimate - the global gold market is estimated to be 13 trillion US dollars, and the global commercial real estate market is valued at nearly 280 trillion US dollars.

In comparison, CoinGecko shows that the global digital asset market has a total market capitalization of approximately $3.3 trillion—equivalent to just 1.3% of the global stock and bond markets. Emerging sectors such as asset tokenization (RWA) have an even smaller total market size of only $13 billion, rendering them almost negligible within the broader financial ecosystem.

Source: Bloomberg

Therefore, for Web3 and the world of digital assets, 2024 is poised to be a historic turning point. Corporate and institutional adoption of crypto assets is moving from the exploratory stage into deep integration. The market for To-B (business-to-business) services is rapidly expanding, becoming the next growth engine for the industry. This shift signifies not only the increasing seriousness with which enterprises and institutions approach digital asset allocation but also hints at a deeper integration of digital assets with the traditional financial system.

Traditional institutions and financial giants, with their vast user bases and enormous capital reserves, are particularly pivotal. Once these resources are successfully bridged, they will inject unprecedented “incremental capitals” and “incremental users” into Web3 and accelerate the rise of “New Money” in the digital asset space, driving the mainstream adoption of blockchain technology.

In this context, the ability to bridge the traditional financial giants of Web2 (traditional finance) with Web3 (digital asset finance) will determine which players become the key infrastructure providers linking the two ecosystems. Those able to attract traditional capital and users into Web3 will have a significant opportunity to disrupt the industry entirely.

In this process, To-B service providers play a crucial role, particularly those with capabilities for delivering compliant, secure, efficient, and diverse services. These providers stand to reap significant rewards during the institutionalization wave.

Take OSL, for example, the first digital asset platform to obtain both a Securities and Futures Commission (SFC) license and an Anti-Money Laundering Ordinance (AMLO) license in Hong Kong. OSL is also publicly listed, audited by one of the Big Four accounting firms, insured, and SOC 2 Type 2 certified. For institutions considering adopting a service, the decision often hinges on the following key criteria:

● Compliance and Security: Service providers must adhere strictly to regulatory requirements and implement robust KYC and AML frameworks. Ensuring the legality and transparency of fund flows is critical, especially when bridging funds from traditional markets into digital assets. Compliance remains the top priority.

● Diverse and Customized Service Capabilities: Institutional clients require more than just trading services. They need comprehensive support across areas such as asset tokenization, custody, and OTC trading to enable full-chain asset allocation and management.

● Efficient Technology Integration: Providers need modular system architectures capable of rapidly deploying digital asset trading and management functionalities for traditional institutions. This reduces technical barriers to entry and enhances service responsiveness.

● Industry Expertise and Partner Networks: Providers with extensive industry experience and strong partnerships can quickly respond to market demands, offering tailored solutions to accelerate institutional clients’ digital asset strategies.

This means that as the demand for To-B services in the digital asset market continues to rise, the importance of licensed exchanges is becoming increasingly prominent. Positioned at the forefront of a new era, they hold the “lifeline” for various business activities—whether it’s enterprises incorporating virtual asset ETFs into their portfolios or conducting trading and custody of virtual assets like Bitcoin and Ethereum, licensed exchanges provide critical support.

Summary

If “Web3 in 2024 is equivalent to Web2 in 2002,” then now might just be a good time to take action.

As enterprises and institutions deepen their digital asset strategies, To-B service providers are taking center stage in the digital asset market. Those who can meet diverse needs—from compliance to trading, from tokenization to payment finance—are poised to become key players defining the next-generation financial ecosystem.

Licensed exchanges like OSL, with their comprehensive and multi-layered service capabilities, are expected to play an increasingly vital role in the wave of digital asset institutionalization. They serve as critical “bridges” and “infrastructure,” efficiently channeling traditional financial market assets into the on-chain ecosystem and unlocking their latent value.

Just like a breeze stirring the smallest water plants, after the dust settles in 2024, Web3 and the crypto industry may truly enter a new cycle.

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