North American investment firms continue to drive global cryptocurrency adoption and usage, spurred on by U.S. regulatory approvals this year that allowed exchange-traded funds based on spot Bitcoin and Ether to begin trading, according to a new report from blockchain forensics firm Chainalysis.

Investors in the U.S. and Canada accounted for about $1.3 trillion in on-chain transactions in the twelve months ended in June, where about 70 percent of those transfers were over $1 million in size, the firm said. The U.S. Securities and Exchange Commission, after years of dragging its feet, approved the Bitcoin ETF in January and followed with the okay of the Ether counterpart in July.

“Broadly speaking, undoubtedly the ETFs are a watershed moment when it comes to institutional adoption,” Eric Jardine, cybercrimes research lead at Chainalysis, said in an interview. Two factors are contributing to the influx of sophisticated investors into crypto, Jardine said. The first is the ability to buy and sell Bitcoin and Ether in such a way that allows mutual funds, pension and insurance companies to avoid the headaches and risk of managing their own digital wallets. The second is the regulatory certainty the SEC provided.

“The stamp of approval can’t be underrated,” Jardine said. “The institutions are now here.”

source: Chainalysis

The second prong of acceptance has come from some of the largest financial institutions -- such as BlackRock, Fidelity and Goldman Sachs – embracing digital assets, Chainalysis said. In one example cited in the report, BlackRock, the world’s largest asset manager with $11.5 trillion in assets, partnered with Coinbase in 2022 to begin offering its customers access to Bitcoin and Ether in its Aladdin trading platform. 

“This integration allowed BlackRock and its clients to manage Bitcoin and Ether exposures seamlessly alongside those of traditional assets,” Chainalysis said.

Read more: New Bitcoin ETFs Raise Questions About Disclosure Rules As They 'Open Up a New Market'

Going forward, Jardine said there may be historical parallels between crypto ETFs and gold ETFs, where investors have continued to add assets to gold ETFs over the years. BlackRock’s Bitcoin ETF, for example, amassed $20 billion in assets quicker than any other ETF, making it the most popular in history, Chainalysis said.

Chainalysis used data from the U.S., Canada and Bermuda for its North American analysis. Of the transaction value through June 2024, the U.S. accounted for about  $900 billion with Canada at about $120 billion, according to Chainalysis. Jardine said a reallocation of Bitcoin holdings is underway among financial firms now that the ETFs are available. Some investors are moving from higher fee vehicles like the Grayscale Bitcoin Trust to very-low fee options like BlackRock’s IBIT, he said. There can also be tax advantages to holding an ETF in a tax-free account when it comes time to sell, he said.

source: Chainalysis

Chainalysis noted that the strong and quick adoption of the Bitcoin ETF amongst investors points to the pent-up demand for exposure to the world’s most-valuable cryptocurrency.

“The impact of the U.S. bitcoin ETPs is not just a U.S. phenomenon; it has far-reaching implications, setting the stage for a broader wave of adoption internationally, as well,” Chainalysis said, using the broad term ETP that captures different types of exchange-traded products.

Read more: Emergence of Spot Ether ETFs Puts Spotlight on the Future of Ethereum

The SEC green light for crypto ETFs didn’t just have an effect on U.S. investors, Jardine said. It was global.

“There’s definitely beyond a doubt a degree to which regulatory clarity can help promote adoption,” he said. Without that regulatory seal of approval, Bitcoin’s appeal was perhaps greatest among investors who can stomach more risk – like retail. Now, however the risk has lessened so that institutional investors are comfortable treating Bitcoin and Ether just like any other asset class.

“That’s pretty big news for the market overall,” Jardine said.