Institutional Adoption Reshapes the Cryptocurrency Industry as Traditional Financial Powerhouses Stake Positions

A wave of institutional adoption could be reshaping the cryptocurrency industry, with traditional financial powerhouses staking significant positions.

Institutional adoption of cryptocurrencies is surging, with major financial players like Morgan Stanley, Goldman Sachs and DRW Capital staking out significant positions in bitcoin and ethereum ETFs.

This shift in Wall Street’s approach to cryptocurrencies, coupled with the record-breaking engagement of the crypto industry in the U.S. election cycle, signals a new era of engagement between traditional finance and digital assets.

“We’re seeing a turning-of-the-tide moment where everyone’s talked about institutional adoption on the horizon. Well, here it is,” says Coinme CEO Neil Bergquist, whose company specializes in bitcoin ATMs and provides crypto infrastructure for partner companies.

Numbers support his assessment: Total assets in cryptocurrency investment products have reached a record $33.5 billion this year, and total assets under management for crypto investment products surpassed $138 billion.

The crypto industry emerged as one of the election cycle’s biggest spenders, directing $170 million to super PACs supporting crypto-friendly candidates. The investment appears to have paid off — 50 of the 58 general election candidates backed by crypto-focused super PACs won their races.

This surge in institutional interest comes amid unprecedented political engagement with cryptocurrency policy.

The mounting institutional adoption reflects a broader transformation in how traditional finance views digital assets.

“We’re seeing further evolution of crypto use cases entering various areas for mainstream adoption,” Bergquist says. This includes an expanding range of payment applications and growing interest in cross-border transactions, areas where traditional banks have historically dominated.

Coinme, one of the first licensed crypto exchanges in the U.S., has spent a decade trying to support more mainstream crypto adoption, partnering with established companies like Coinstar to enable bitcoin purchases at major retailers across the U.S.

The company has focused on building regulated infrastructure for cash-to-crypto conversions, implementing standard banking controls like Know Your Customer requirements, and blockchain monitoring — steps that could make digital assets more palatable to traditional institutions.

This regulatory-first approach mirrors the broader industry shift toward more conventional financial guardrails.

Until recently, Treasury Department guidance has made many institutions hesitant to engage directly with digital assets.

However, this cautious approach may be shifting, as major financial players find regulated ways to gain exposure, such as the recent explosion of ETFs and the recent launch of bitcoin options trading.

The market has responded dramatically to these institutional moves and to the election of Donald Trump as U.S. president.

Trump was an outspoken advocate for crypto on the campaign trail. Following his election on Nov. 5, bitcoin’s price has surged to new highs, recently reaching a high of over $93,000.

Bitcoin ETFs alone have attracted $1.67 billion in inflows over a single week in November, bringing their total assets to $95.4 billion.

Ethereum has followed suit, with ETF products drawing $646 million in new investment and total assets reaching $9.15 billion.

It’s a bull market that stands in stark contrast to the crypto winter left in the wake of FTX’s collapse in 2022.

“In the previous 2021 bull market cycle, we were talking to a lot of banks who wanted to offer digital currency services,” Bergquist recalls. “Those partnerships quickly evaporated after the FTX fiasco.'”

The new political landscape could accelerate a wave of institutional adoption.

With Republicans set to control both chambers of Congress, legislation that previously stalled may find new life.

For example, the Financial Innovation and Technology for the 21st Century Act, which would shift more oversight responsibility to the Commodity Futures Trading Commission, passed the House with strong bipartisan support but stalled in the Democratic-controlled Senate.

“We have to make certain that [crypto companies] know what the rules are and how to follow them so that the crypto industry can thrive here,” Incoming Ohio Sen. Bernie Moreno told The Wall Street Journal.

Moreno’s victory over Senate Banking Committee Chair Sherrod Brown was celebrated by crypto executives including Coinbase CEO Brian Armstrong and Ripple CEO Brad Garlinghouse.

TradFi AdoptionWhile major banks are exploring ways to integrate digital assets into their existing services, some of the biggest challenges identified by crypto executives include preventing regulatory oversight from hampering growth, gaining access to banking services, and stabilizing dollar-pegged cryptocurrencies.

However, many companies and crypto enthusiasts are already using bitcoin for practical applications like payments.

“We’re seeing a lot of demand in the marketplace from partners that are really focused around creating a seamless fiat on- and off-ramp,” says Bergquist.

“Interoperability is important. We want it to be seamless to move in and out of fiat and crypto. We’re seeing a lot of interest for that around payments — companies wanting to enable those who have crypto to be able to spend it for goods or services.”

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