Banks, ETFs and Payment Giants: How Bitcoin Finally Arrives in the Financial System

Banks, ETFs and Payment Giants: How Bitcoin Finally Arrives in the Financial System

The Bitcoin market is undergoing a fundamental transformation: While the price has recorded a decline of around 50 percent since its all-time high, an institutional infrastructure offensive is taking place behind the scenes that underscores the long-term potential of the digital currency. From custody offerings by major banks to billion-dollar ETF inflows to strategic considerations in payment processing – the established financial world is integrating Bitcoin infrastructure at an unprecedented pace. These developments mark a turning point: Bitcoin is no longer just being traded as a speculative asset, but is being systematically embedded in the core systems of traditional finance.

The Facts

At the Strategy World conference, two major US banks presented concrete plans for entering Bitcoin infrastructure. Citi announced through Nisha Surendran, head of building the digital asset custody business, the launch of a platform later this year that will integrate Bitcoin into classic banking processes. The initial focus is on custody, institutional key management and wallet infrastructure, allowing customers to manage Bitcoin positions similarly to traditional assets ^[1].

Morgan Stanley outlined a parallel roadmap for expanded crypto offerings. Amy Oldenburg, Head of Digital Asset Strategy, explained that the bank wants to initially enable E*Trade customers to trade spot cryptocurrencies through a partner. Reuters had already reported that Morgan Stanley is working with Zerohash for this purpose and that the launch is planned for the first half of 2026. In a next step, a more integrated custody and trading solution is to follow. Additionally, according to Oldenburg, Morgan Stanley is also examining crypto-based yield and lending products, without naming a specific timeline ^[1].

Parallel to these infrastructure developments, demand from institutional investors remains robust. US-listed spot Bitcoin ETFs recorded combined inflows of $1.02 billion from Tuesday through Thursday, after suffering outflows for five consecutive weeks. On Wednesday alone, $506.51 million flowed in – the largest single day of this three-day period ^[2]. ETF analyst Nate Geraci commented that investors appeared to be "buying the dip" and described the approximately $6.5 billion in outflows since Bitcoin's record high in early October as moderate relative to the $55 billion the category has absorbed since January 2024. "50% drawdowns are a walk in the park for long-time BTC investors," Geraci wrote. "But it appears even newer ETF investors aren't concerned" ^[2].

In the payment processing sector, another structural shift is emerging. Payment service provider Stripe, one of the world's most valuable private fintech companies with a recent valuation of $159 billion, is considering acquiring PayPal or parts of it, according to Bloomberg. The considerations are at an early stage, and a deal is not certain. In the wake of the acquisition rumors, PayPal temporarily rose around 15 percent to $48.5 and reached a market capitalization of around $43.5 billion ^[3].

For the crypto market, this deal speculation is particularly relevant because Stripe recently completed the acquisition of stablecoin platform Bridge and through it offers infrastructure that enables companies to accept and pay out stablecoins like USDC or USDT and convert between fiat and stablecoins. PayPal, in turn, has its own dollar stablecoin PYUSD on the Solana blockchain with a market capitalization of around $4.1 billion. A deal would not only bundle reach in the checkout business, but could also push the role of stablecoins as payment infrastructure further into the mainstream ^[3].

Analysis & Context

These three development strands – bank custody, ETF demand and payment infrastructure – together form a mosaic of institutional Bitcoin adoption that extends far beyond short-term price movements. The custody offensive by Citi and Morgan Stanley addresses the critical bottleneck for institutional investors: the integration of Bitcoin into existing reporting, tax and compliance processes. As long as Bitcoin is held in wallets or on exchanges outside the banking platform, it remains practically inaccessible for many institutional portfolios – regardless of the investment case. With bank-based custody solutions, this gap closes, and banks position themselves as a trusted interface to avoid losing the customer relationship to crypto exchanges.

The robust ETF inflows despite a 50 percent price decline signal remarkable market maturity. Historically, such drawdowns were typically accompanied by capitulation-like selling. The fact that institutional investors are buying more through regulated ETF vehicles while the price is falling indicates a fundamentally changed investor structure. The Bitcoin market increasingly consists of long-term oriented allocations, not just speculative positions. The weakening of aggressive selling pressure mentioned by CoinEx chief analyst Jeff Ko could indicate that much of the weak hands have already been shaken out.

The potential Stripe-PayPal constellation would add another dimension: the integration of crypto infrastructure into everyday payment processes. While Bitcoin primarily functions as a store of value, stablecoins could mediate as payment rails between worlds. A combined Stripe-PayPal platform with stablecoin infrastructure would have the reach and technical capacity to make crypto-based payments a mass phenomenon. This would in turn legitimize the entire blockchain infrastructure and indirectly strengthen Bitcoin as the digital gold of this new financial architecture.

Conclusion

• The parallel custody initiatives by Citi and Morgan Stanley mark the beginning of a broad integration of Bitcoin into traditional banking infrastructure – a structural change that significantly simplifies access for institutional investors and further consolidates the legitimacy of Bitcoin as an asset class

• ETF inflows of over one billion dollars during a significant price decline demonstrate a fundamentally changed investor structure with higher price insensitivity and longer-term investment horizon – a sign of increasing market maturity

• The possible merger of Stripe and PayPal could bring stablecoin infrastructure into the mainstream of payment processing and thus legitimize the entire blockchain economy, from which Bitcoin would benefit in the long term as a digital reserve asset

• For long-term oriented investors, these infrastructure developments are more relevant than short-term price fluctuations – they create the institutional prerequisites for a permanent integration of Bitcoin into the global financial system

• The race for crypto infrastructure among established financial institutions underscores that Bitcoin is no longer treated as a marginal asset, but is considered a strategic necessity for modern financial service providers