Adam Back, CEO and Co-Founder of Blockstream, identifies pension funds, managed funds, and model portfolios as the anticipated "third wave" of Bitcoin adoption. Speaking in a recent interview, Back contextualized this phase by noting that the first wave consisted of individual investors, while the second was driven by Exchange-Traded Funds (ETFs). He emphasized that institutional integration through traditional asset management structures remains largely forthcoming.
Back highlighted specific preparations underway within the Swiss banking sector to accommodate this shift. He pointed to Blockstream's establishment of an office in Lugano and its expansion into consulting services as evidence of growing institutional interest. According to Back, Swiss banks are actively seeking quantum-safe Bitcoin custody solutions, signaling a move toward more robust security standards for large-scale holdings. The discussion also touched on the regulatory landscape, including Basel rules and their impact on the cost of holding Bitcoin for institutions, as well as the operational choices between building in-house custody versus using third-party custodians.
The transition from retail and ETF-driven adoption to deep institutional integration via pensions and managed funds represents a structural maturation of the Bitcoin market. Unlike previous waves, which were often speculative or accessible through simplified wrappers, this phase requires complex infrastructure, including secure custody, compliance with stringent regulatory frameworks like Basel III, and long-term investment mandates. The focus on quantum-safe custody among Swiss banks indicates that institutional players are prioritizing future-proofing against emerging technological risks, suggesting that capital allocation decisions are being made with multi-decade horizons in mind.
However, significant barriers remain regarding where institutions currently get stuck, particularly around regulatory clarity and operational execution. The choice between in-house development and external custodians is not merely technical but strategic, affecting liability and control. As regulation continues to shape custody practices, the pace of this third wave will depend on how effectively jurisdictions balance innovation with financial stability requirements. The involvement of established entities like Blockstream in providing consulting and infrastructure suggests that the industry is preparing for a gradual, rather than abrupt, influx of traditional finance capital.
