Opinion: Thomas Chen, CEO of Function
Bitcoin exchange-traded funds (ETFs) have solved the access problem but remain dormant. There is now a need for reliable, auditable, institutional-grade pathways to convert Bitcoin exposure into scalable yields.
Bitcoin is evolving from a digital store of value to a form of productive capital. Continuing to treat Bitcoin (BTC) like digital gold – storing it for long-term appreciation – misses its real opportunity as a reserve asset for the digital age.
Bitcoin is not just a store of value; This is programmable collateral. This is productive capital. It is the base layer for institutional participation in onchain finance.
The liquidation event of October 10 was caused by the inability to efficiently execute the core risk-management function. On the other hand, this event also proved that Bitcoin Yield projects that emphasize security and simplicity will win. As volatility increased, the market saw an increase in arbitrage opportunities as spreads increased across Bitcoin yield projects. Market-neutral strategies that did not leverage much were able to withstand the weather and actually outperform because they profited on market dislocations.
Composable, capital-efficient infrastructure has evolved, and transparent and auditable yield pathways now exist. Institutional deployment frameworks have matured both technically and legally. Yet the majority of Bitcoin held by institutions has the potential to yield far higher yields.
Bitcoin as productive capital
The strategy’s management team has been able to financially engineer the BTC acquisition with finesse. The same may not apply for other BTC digital asset funds. Copytrading strategy is not a strategy. Ultimately, the BTC accumulation phase will end, and the BTC deployment phase will begin.
In traditional finance (tradefi) markets, allocators do not store their assets indefinitely. They rotate, hedge, optimize and constantly adjust them for maximum yield (risk-adjusted). However, with Bitcoin, allocators are still in the accumulation phase, but eventually, like any other asset, they need to start putting their Bitcoin to work.
What does this mean for allocators? This is making Bitcoin work like productive capital with a known and trusted framework. Think about a short-term loan that is backed by adequate collateral. Additionally, market-neutral base strategies that are not dependent on Bitcoin price appreciation, supply liquidity on vetted and compliant institutional platforms, and conservative or low-risk covered call programs with clear, predetermined risk limits.
Each route should be transparent and easy to audit. It should be configured for duration, counterparty quality and liquidity. The goal is not to maximize yield; This is to optimize it to prevent instability within the mandate. If the yield is too low relative to the risk profile, the risk/reward of deploying capital is not worth it for many, some liquidity providers (LPs) believe.
We need an operating model that allows us to use it without violating compliance standards, while keeping it simple. Once yields are securitized and standardized, the bar shifts, allowing capital to escape the liability that occurs when it is idle.
As of Q4 2024, there were more than 36 million mobile crypto wallets active globally. This is a record high and indicative of a broader ecosystem of engagement where retail businesses are learning how to transact, lend, stake and earn. A similar situation is possible for institutions that are heavily capitalized and run under strict mandates. Many still consider Bitcoin merely a store of value, having not yet fully deployed its potential – and in doing so, in a fully compliant manner.
Changing exposure to deployment
According to the 2025 survey, there are plans to increase crypto allocation among institutional investors, especially 83%. However, allocation growth can only reach its full potential if complemented with solid infrastructure to support the operational requirements.
The gears are already turning. Arab Bank Switzerland and XBTO are introducing a Bitcoin yield product as some centralized exchanges prepare to launch their own yield-bearing Bitcoin funds for institutional clients, offering access to structured BTC income.
These are early signs, not endorsements. What matters is the direction of travel: whether the yield is delivered through creditworthy routes, with segregated assets and a clear negative structure. Institutions want to receive low-volatility income from on-chain mechanics, but remain wrapped up in the controls they already understand.
What is happening here is not imaginary; This is basic. Bitcoin is being built into a programmable infrastructure, adding even more yield avenues beyond its already strong reputation as “digital gold.” It is no longer a niche interest and is being actively adopted by institutions looking for liquidity and low-volatility income strategies – only this time, they are onchain.
Bitcoin is clearly maturing. This is actually a major structural trend where productive assets are winning the allocation. The market no longer requires greater access; These are even more ways to use Bitcoin productively.
Yield of analog infrastructure compounds
Upgrading the standard to performance means defining success in terms that are measurable and quantifiable. Think in terms of actual versus implied yield, slippage and target drawdown tolerance – plus, funding costs, collateral health and time to liquidity under stress.
When the tools exist to productively deploy BTC while adhering to institutional custody, risk management and compliance, the standard will be advanced and performance will change. As doing nothing becomes the exception, Bitcoin’s role in the economy shifts from passive allocation to productive, yield-bearing capital. Allottees will no longer be able to sit idle.
Institutions that quickly implement these changes to the standards will secure a greater share of the liquidity, structure, and transparency that composable infrastructure provides.
The window to define best practice is already open.
Now is the time to formalize the policy, launching small, audible programs that expand and build reach far beyond reach. Now is the time to turn exposure into deployment in a productive, transparent and fully compliant manner and leverage Bitcoin’s full potential.
Opinion: Thomas Chen, CEO of Function.
This article is for general information purposes and should not be construed as legal or investment advice. The views, opinions and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
