While earning yield on Bitcoin holdings is still a novelty, there are opportunities to do so through centralized lending platforms and Bitcoin-related networks.
DeFi Technologies subsidiary Valour has introduced a Bitcoin staking exchange-traded product (ETP) on the London Stock Exchange, providing investors with crypto yield opportunities as the UK moves toward easing restrictions on digital assets.
According to a Thursday announcement, the Bitcoin staking ETP has a 1.4% annual yield and is backed by Bitcoin (BTC) held in cold storage, with security coming from multiparty computation (MCP) technology.
For the moment, the new Bitcoin staking ETP is available to institutions and professional investors. The United Kingdom will allow retail investors to buy crypto exchange-traded notes (ETNs) again on Oct. 8, removing a ban in place since 2021.
The announcement didn‘t specify how the yield would be generated. However, Valour has another Bitcoin ETP listed on a French exchange that relies on coins delegation on the Core Chain to generate Bitcoin yield. Core Chain is an EVM-compatible layer-1 blockchain backed by Bitcoin’s proof-of-work consensus mechanism.
Shares of DeFi Technologies traded on Nasdaq closed up by 5% on the news, according to data from Google Finance.
DeFi Technologies share price. Source: Google Finance
While Bitcoin itself doesnt generate staking yield, holders can earn returns through alternative avenues such as centralized lending platforms, Bitcoin layer-2 networks like Stacks and Babylon, or by wrapping BTC into tokens like Wrapped Bitcoin (WBTC) to participate in DeFi lending protocols.
Cryptocurrency exchange Coinbase unveiled a Bitcoin yield fund in May, targeting non-US institutional investors. According to Solv Protocols co-founder Ryan Chow, the demand for yield-bearing Bitcoin strategies is rising as firms seek liquidity without selling their BTC.
Bitcoin and Ether (ETH) ETPs debuted on the London Stock Exchange in May 2024.
United Kingdom crypto changes abound
Recent developments suggest that the United Kingdom's approach to cryptocurrencies may be shifting.
On Tuesday, the Financial Times reported that the UK is looking to increase cooperation with the United States on digital assets, with Britain looking to boost innovation in the sector.
Trade groups have even pushed the government to add blockchain technology to the UKs tech collaboration with the US.