On September 11, 2025, two powerful forces collided in the world of digital finance: China’s renewed crackdown on crypto businesses, and Bitcoin’s ongoing evolution from a speculative asset into an engine of institutional finance. The juxtaposition of these trends highlights the growing complexity—and the global stakes—of cryptocurrency’s future.
Beijing, never shy about its skepticism toward digital currencies, took a dramatic step by ordering large internet corporations, central state-owned enterprises, and branches of state-owned banks in Hong Kong to withdraw from all digital currency activities, with a particular focus on stablecoins. According to Caixin, the Chinese government emphasized that these entities should prioritize the development of the real economy over the risks associated with virtual assets. The message was clear: virtual coins are not the way forward for China’s core economic players.
The impact was immediate. Many major Chinese tech companies, which had been exploring or actively investing in crypto-related businesses in Hong Kong, now face the prospect of a forced exit. The directive also hit state-owned financial institutions hard. The Industrial and Commercial Bank of China (ICBC), the country’s largest state-owned bank, had already applied for a license to issue stablecoins in Hong Kong. Now, those plans are in jeopardy, as Beijing’s tightened regulations threaten to pull the plug on such initiatives.
This move comes at a delicate time for Hong Kong. The city has been working hard to carve out a reputation as a global digital finance hub, recently implementing a legal framework for stablecoins in hopes of attracting capital and digital asset enterprises from around the world. But with Beijing’s latest intervention, Hong Kong’s allure for global crypto players may be waning. The episode reinforces China’s unwavering stance: despite Hong Kong’s regulatory openness, the mainland is not about to loosen its grip on digital currencies anytime soon.
Yet, even as China doubles down on its restrictions, the broader world of cryptocurrency—especially Bitcoin—continues to transform at a breakneck pace. On the very same day as Beijing’s clampdown, Bitcoin’s market capitalization soared past $2.2 trillion USD, maintaining its position as the world’s leading digital currency. But this isn’t just about headline-grabbing numbers. The real story is the emergence of the ‘real-world Bitcoin’ (RWB) movement, which seeks to mobilize Bitcoin’s immense capital base and turn it from a passive store of value into an income-generating, legally compliant, and institutionally attractive asset.
For years, Bitcoin was known as “digital gold”—a scarce, liquid, and safe reserve asset. But that reputation, while impressive, kept Bitcoin somewhat stagnant, locked in a role as a speculative reserve rather than an engine for financial innovation. Enter RWB: a movement that aims to unlock Bitcoin’s potential by integrating it into the global financial infrastructure, making it not just a store of value but a productive asset.
According to a survey by Plume of 15 leading protocols building Bitcoin-based products, developers are now shifting away from high-risk, custodial lending models—think of the infamous collapses of Celsius and BlockFi—and toward frameworks that emphasize self-custody, transparency, and regulatory compliance. In this new paradigm, projects like Yala, Avalon Finance, and BimaBTC are supporting stablecoins that are fully backed by Bitcoin collateral. This allows users to maintain their Bitcoin holdings while simultaneously unlocking liquidity, a win-win for both individual and institutional investors.
The numbers are telling. Yala’s total value locked (TVL) hit $230 million USD in August 2025, while Avalon Labs’ TVL surpassed $2 billion USD earlier in the year. USDa, a Bitcoin-backed stablecoin, reached a market capitalization of $260 million USD. These stablecoins aren’t just operating within the decentralized finance (DeFi) ecosystem; they are beginning to make inroads into the real-world assets (RWA) markets, linking Bitcoin’s liquidity with traditional financial instruments like credit and commodities.
Platforms such as Bitfi and Bounce Bit are bridging the gap between centralized finance (CeFi) and DeFi, offering income strategies that combine on-chain transparency with off-chain guarantees designed to win over institutional investors. This dual approach is helping to build trust among organizations and funds that might have previously viewed crypto with skepticism.
But Bitcoin’s evolution doesn’t stop at liquidity. It is increasingly being used as a foundational infrastructure asset. For example, Pell Network is utilizing Bitcoin staking mechanisms to secure applications on the Plume network, while Babylon integrates Bitcoin directly into decentralized staking layers to provide security for RWA protocols. Satlayer employs staked Bitcoin as programmable collateral, ensuring accuracy and security through strict penalty mechanisms. This shift allows Bitcoin to serve as a validator asset for cross-chain networks, leveraging its high liquidity to underpin the security of decentralized infrastructure.
For institutions, this represents a new revenue model—one that isn’t based on speculative leverage but on contributing to network security. Combined with compliance modules, such as those offered by Plume, this model provides a scalable and auditable pathway for institutional Bitcoin staking.
The rise of native Bitcoin financial products is another sign of the asset’s maturation. Protocols like exSAT and LorenzoProtocol are building comprehensive asset management systems for Bitcoin. exSAT positions Bitcoin as the foundational layer for on-chain banking, integrating revenue, compliance, and RWA connections to create a diverse financial platform. Lorenzo focuses on institutional-grade packaged products, such as enzoBTC and on-chain traded funds (OTF), making it easier for traditional investors to incorporate Bitcoin into their portfolios. SolvBTC, launched by SolvProtocol, facilitates efficient cross-border Bitcoin circulation and allows users to participate in staking, lending, and income-generating strategies across both decentralized and traditional finance.
Credit markets are also increasingly leveraging Bitcoin as institutional collateral. ArkisXYZ and DesynLab, for example, offer credit channels secured by Bitcoin, with Arkis utilizing a traditional prime brokerage model for compliant lending and leverage management, and Desyn packaging Bitcoin liquidity into risk-managed pools. CIAN Protocol simplifies institutional access to structured Bitcoin products, aggregating collateralized income streams and even offering white-label solutions for rapid onboarding of funds and custodians.
At the heart of this transformation is a relentless focus on compliance, transparency, and predictable performance—qualities that are essential for institutional adoption. Plume’s infrastructure, with its integrated compliance, RWA channels, and EVM compatibility, is seen as a key enabler in making Bitcoin an institutional-grade asset. This foundation supports a multi-layered real-world Bitcoin economy encompassing liquidity, security, asset management, credit, and collateralization.
Ultimately, the core market for Bitcoin in the real world is the institutional sector. Plume and its partners are bridging the gap between DeFi innovation and institutional adoption, turning Bitcoin into a compliant, auditable, and standardized financial asset. The goal isn’t to replace Bitcoin’s “digital gold” status, but to expand its boundaries—making it a productive, liquid, and secure asset at the heart of global finance, much like gold once was for central banks but with the added twist of digital programmability and income potential.
As China tightens its grip and global innovators push Bitcoin into the heart of institutional finance, the future of digital assets is being written in real time—one regulatory edict and one protocol at a time.
