Crypto asset manager and ETF provider Bitwise has made its first allocation into decentralized finance (DeFi) through a partnership with on-chain credit specialist Maple Finance, the companies said on Thursday.
Bitwise’s allocation, the size of which was not disclosed, is leveraging a Maple bitcoin-backed lending product, and represents a significant milestone in the adoption of on-chain credit by institutional allocators, said Maple CEO Sid Powell. Maple’s BTC backed lending product is available to accredited investors in the U.S.
As digital versions of real world assets become a normal component of traditional finance, firms are looking beyond things like tokenized Treasury Bills, particularly as interest rates have been dropping while DeFi yields are seeing a resurgence.
Bitwise is a big believer in the future of asset management moving on-chain, Powell said, where products are transparent and firms can find opportunities that don’t exist in traditional finance.
“In this case, the yield from lending against bitcoin is not a product that’s already available anywhere else in traditional finance,” Powell said in an interview. “Maple packages this product in a way that’s consumable by institutional asset managers.”
The move required Bitwise to do some pretty serious due diligence and background work, Powell said.
“It was about 12 months of discussions and work in the background between our teams to pull this together,” he said. “Bitwise is incredibly thorough and this process involved working with their operations team, their legal and compliance team, their risk team, as well as tax advisors.”
As well as its high profile crypto ETFs, Bitwise has over $12 billion in client assets across separately managed accounts, private funds, hedge fund strategies, and staking.