On January 3rd, 2009, the Bitcoin network was created as Satoshi Nakamoto mined the first block of Bitcoin. Embedded in this first block was the text “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

Bitcoin was created as a decentralized, peer-to-peer currency, which its advocates saw as an antidote to centralized banks and financial institutions. Bitcoin’s early history was ridden with events such as the infamous Mt. Gox hack and the Silk Road bust — a testament to an exuberant, nascent industry that played fast and loose with regulation.

All of this is changing. Nearly a decade after Mt. Gox set up shop, the Bitcoin landscape couldn’t be more different as a growing number of institutions enter the space.

Currently, this is playing out across three key areas:

Futures markets: Regulated, dollar-settled futures from the CME and CBOE allow institutions to take long and short positions on Bitcoin without actually owning the digital asset.

Regulated, dollar-settled futures from the CME and CBOE allow institutions to take long and short positions on Bitcoin without actually owning the digital asset. Bitcoin ETFs: Like futures, a Bitcoin ETF would allow investors to gain indirect exposure to Bitcoin. More importantly, it represents a key milestone in the legitimization of the space.

Like futures, a Bitcoin ETF would allow investors to gain indirect exposure to Bitcoin. More importantly, it represents a key milestone in the legitimization of the space. Custody: The growth of custody services is allowing investors to hold and secure Bitcoin, mitigating the risk of losing or misplacing their private keys. These solutions help institutions to comply with regulations and invest in digital assets.

In this article, we’ll walk through a brief timeline of institutional growth in Bitcoin, before diving into each of these three areas.

A Timeline of Bitcoin’s Path to Maturity

Bitcoin futures are now traded on regulated exchanges like the CME. Major financial institutions, from Goldman Sachs to BlackRock, have announced initiatives in Bitcoin. Investors not only have access to regulated exchanges to buy and sell bitcoin, but there has also been significant growth in custody services from players like Coinbase and Fidelity to help investors secure their bitcoin.

The timeline below shows the increasing institutionalization of Bitcoin over the past decade:

July 2013: The Winklevoss twins file the first application for a Bitcoin ETF.

The Winklevoss twins file the first application for a Bitcoin ETF. November 2013: The US Senate holds hearings on Bitcoin to discuss challenges the digital currency poses to regulatory agencies.

The US Senate holds hearings on Bitcoin to discuss challenges the digital currency poses to regulatory agencies. March 2014: Xapo, a bitcoin wallet and cold-storage business, offers its products to the public, in what is one of the first custody solutions for Bitcoin.

Xapo, a bitcoin wallet and cold-storage business, offers its products to the public, in what is one of the first custody solutions for Bitcoin. June 2015: New York State creates the BitLicense with an aim at regulating virtual currencies. Any company that deals in virtual currencies with operations in New York must apply and be approved for a BitLicense.

New York State creates the BitLicense with an aim at regulating virtual currencies. Any company that deals in virtual currencies with operations in New York must apply and be approved for a BitLicense. October 2015: SFOX opens to the public, introducing the prime dealer model to the crypto sector.

SFOX opens to the public, introducing the prime dealer model to the crypto sector. March 2017: The SEC rejects the Winklevoss ETF proposal.

The SEC rejects the Winklevoss ETF proposal. December 2017: The CME and the CBOE launch Bitcoin futures.

The CME and the CBOE launch Bitcoin futures. May 2018: Goldman Sachs launches a Bitcoin trading desk.

Goldman Sachs launches a Bitcoin trading desk. August 2018: The owner of the NYSE announces that they’re in the process of creating Bakkt, a federally regulated, physically-backed futures market for Bitcoin.

The owner of the NYSE announces that they’re in the process of creating Bakkt, a federally regulated, physically-backed futures market for Bitcoin. October 2018: Asset manager Fidelity launches a platform for trading virtual currencies targeted at institutional investors.

Asset manager Fidelity launches a platform for trading virtual currencies targeted at institutional investors. March 2019: The CBOE announces that it will not continue adding Bitcoin futures contracts, likely due to a lack of volume. Fidelity launches its Bitcoin custody solution.

The CBOE announces that it will not continue adding Bitcoin futures contracts, likely due to a lack of volume. Fidelity launches its Bitcoin custody solution. May 2019: The CME announces that May was its highest-volume month for Bitcoin futures, with an average daily volume of $515 million in notional value. Fidelity announces that it will allow customers to begin trading Bitcoin and other virtual currencies in the coming weeks. Microsoft announces that it’s building a decentralized identity tool on Bitcoin.

The CME announces that May was its highest-volume month for Bitcoin futures, with an average daily volume of $515 million in notional value. Fidelity announces that it will allow customers to begin trading Bitcoin and other virtual currencies in the coming weeks. Microsoft announces that it’s building a decentralized identity tool on Bitcoin. June 2019: LedgerX receives approval for bitcoin-settled futures contracts.

LedgerX receives approval for bitcoin-settled futures contracts. July 2019. ErisX receives approval for bitcoin-settled futures contracts. Bakkt begins user-testing for bitcoin-settled futures.

Starting with the Winklevoss ETF proposal in 2013 to the recent approval of bitcoin-settled futures from LedgerX and ErisX in 2019, Bitcoin has matured unbelievably quickly over the past ten years. Below, we’ll dive into the three key categories where institutions are entering Bitcoin: futures, exchange-traded funds, and custody.

Regulated Bitcoin Futures

For years, retail traders have been able to buy and sell Bitcoin futures on exchanges not subject to U.S. regulatory oversight like BitMEX and OKEx. Today, the rise of Bitcoin futures trading on U.S. regulated exchanges like the CME gives institutional investors and traders the ability to take on greater exposure to Bitcoin. Regulated futures markets allow traders to speculate on the price of BTC and hedge for potential downside risk.

The CME and the CBOE both launched futures trading for Bitcoin in December of 2017. Both institutions are regulated by the Commodity Futures Trading Commission (CFTC) in the United States.

Initial futures volume on the CME was low upon launch, with an average daily notional volume of 1,056 BTC in contracts traded for December 2017. Trading volume has picked up substantially over the past year, with an average daily notional volume of 13,604 BTC in contracts traded for May 2019 — or around $108 million.