Start with Securitization

Insti­tu­tion­al investors are intrigued by cryp­to-native yields — from Ethereum stak­ing to sta­ble­coin farm­ing — but wal­lets and DeFi fron­tends are some­times still hard to access, and famil­iar entry points for con­ven­tion­al asset man­age­ment sys­tems are need­ed. In fact, in a sur­vey con­duct­ed by EY-Parthenon, 62% of insti­tu­tion­al investors still pre­fer to get their expo­sure to dig­i­tal assets through more tra­di­tion­al and reg­is­tered vehi­cles (Source)

 

The true unlock lies in struc­tured prod­ucts with cryp­to under­ly­ings: Repack­ag­ing dig­i­tal DeFi yields into reg­u­lat­ed, bank­able prod­ucts like per­for­mance-linked notes (PLNs), Exchange Trad­ed Prod­ucts (ETP’s), etc. that fit into exist­ing finan­cial rails & port­fo­lio man­dates. This set­up means that on one side it improves trust with investors, on the oth­er side it gives a new dis­tri­b­u­tion chan­nel for foun­da­tions & protocols.

 

Rather than forc­ing insti­tu­tions to touch raw tokens & posi­tions direct­ly, struc­tur­ing prod­ucts that look like bonds or funds — com­plete with ISIN’s, legal doc­u­men­ta­tion, and cus­to­di­ans — makes cryp­to yields acces­si­ble with­in tra­di­tion­al portfolios.

 

 

The Prob­lem: Why Some Insti­tu­tions Can’t Tap DeFi Yet

Despite promis­ing yields, most insti­tu­tions can’t hold cryp­to-native yield or DeFi tokens due to:

 

• No rec­og­nized iden­ti­fi­er (e.g., ISIN/ticker)

• Lack of a reg­u­la­to­ry wrapper

• Cus­tody con­straints (They can’t self-cus­tody or man­age pri­vate keys)

 

This reg­u­la­to­ry and oper­a­tional fric­tion pre­vents even top-per­form­ing DeFi strate­gies from being adopt­ed by asset managers.

 

 

The Solu­tion: Secu­ri­ti­za­tion Vehicles

The workaround? Pack­age cryp­to returns into famil­iar Trad­Fi struc­tures — or alter­na­tive­ly, bring­ing on-chain assets off-chain.

 

A Secu­ri­ti­za­tion Vehi­cle (SV) allows the cre­ation of seg­re­gat­ed “com­part­ments” that can issue notes linked to cryp­to strate­gies while main­tain­ing EU reg­u­la­to­ry com­pli­ance. See ‘Secu­ri­ti­za­tion’ on our web­site to learn more.

Each com­part­ment issues PLNs legal­ly tied to the under­ly­ing strategy’s per­for­mance. Investors buy a bond-like instru­ment with bank-com­pat­i­ble cus­tody and doc­u­men­ta­tion, while behind the scenes, the note is backed by cryp­to-native yield bear­ing products.

 

 

Exe­cu­tion Stack: Who Can Make It Happen?

Three reg­u­lat­ed play­ers coor­di­nate to cre­ate and man­age these products:

 

• Black Man­ta Cap­i­tal Part­ners (BMCP): A MiFID II Licensed finan­cial ser­vices insti­tu­tion oper­at­ing a Lux­em­bour­gish Secu­ri­ti­za­tion Vehi­cle — Which issues and dis­trib­utes the notes.

• Sors Dig­i­tal Assets: A VASP Licensed dig­i­tal assets ser­vices provider designs and man­ages the struc­ture — han­dling pric­ing, NAV cal­cu­la­tions, and fund flows.

• For­tu­na Cus­tody: A VASP Licensed cus­to­di­an secur­ing the under­ly­ing cryp­to native assets using insti­tu­tion­al-grade infrastructure.

 

Togeth­er, a set­up like this can turn any cryp­to native yield into ful­ly-com­pli­ant invest­ment prod­ucts, acces­si­ble to tra­di­tion­al investors.

 

 

Reserve Pro­to­col: The DeFi Yield Engine

ETH+ and USD3 are DTF’s — Decen­tral­ized Token Folios, or ‘cryp­to bas­kets’ — built on Reserve Protocol’s infra­struc­ture. Reserve tracks per­for­mance, auto­mates yield accru­al, and pro­vides the trans­paren­cy and pro­gram­ma­bil­i­ty need­ed to mir­ror that yield into a tra­di­tion­al note structure.

 

Reserve acts as the “ora­cle” and the mid­dle­ware that syncs on-chain per­for­mance with off-chain finan­cial prod­ucts — ensur­ing every token’s yield is prop­er­ly reflect­ed in investor returns.

 

 

An Exam­ple in Practice

Here’s how it works:

 

1. Prod­uct Initiation:

• BMCP launch­es a “Per­for­mance-Linked Note – ETH+” via a ded­i­cat­ed SV compartment.

• The com­part­ment is cre­at­ed with­in the SPV.  Legal coun­sel drafts an offer­ing mem­o­ran­dum and sup­port­ing legal doc­u­men­ta­tion describ­ing that the note’s returns link to the ETH+ token’s performance.

 

2. Investor Cap­i­tal Deployment

• Investors nav­i­gate to the BMCP plat­form and com­plete KYC/AML.

• Investor decides to deploy cap­i­tal into “Per­for­mance-Linked Note – ETH+”. The investor reads the legal pack and signs the sub­scrip­tion agree­ment with the pre­ferred amount. 

• Investor wires fiat to Lux­em­bourg SPV ‘ETH+ Com­part­ment’ bank account

 

3. Under­ly­ing Asset Held in Custody

• Under the instruc­tion of the com­part­ment man­ag­er, For­tu­na mints ETH+ by deposit­ing ETH on Reserve. Those tokens (worth, say, €10 mil­lion) sit in the secure For­tu­na Fortress plat­form, owned by Com­part­ment ETH+.

• MPC key-man­age­ment and mul­ti-sig approvals ensure bank-grade security.

 

4. Track­ing token per­for­mance, cal­cu­lat­ing returns, and updates NAV

• Reserve shows that ETH+ yields 1.5% over a quar­ter (rebas­ing increas­es token quan­ti­ty). Now the compartment’s ETH+ tokens equal €10.15 million.

• Sors updates the note’s NAV and noti­fies investors.

 

5. At matu­ri­ty or redemp­tion, investors receive returns match­ing ETH+ yield — no direct cryp­to expo­sure or wal­lets required.

 

This set­up means insti­tu­tions can access cryp­to-native returns and expo­sure to the under­ly­ing cryp­to’s price per­for­mance through secu­ri­ties they already under­stand and can hold on their bal­ance sheets.

 

 

Why this Matters

The chal­lenge for insti­tu­tions isn’t wal­lets — it’s struc­ture. They need com­pli­ant secu­ri­ties with doc­u­men­ta­tion, ISINs, and reg­u­lat­ed cus­tody. Secu­ri­ti­za­tion pro­vides the bridge, trans­form­ing DeFi strate­gies into prod­ucts insti­tu­tions already know how to buy, hold, and report.

 

That shift is already under­way: BMCP, Sors, and For­tu­na are work­ing togeth­er to  issue per­for­mance-linked notes backed by ETH+ and USD3, deliv­er­ing cryp­to-native yield through tra­di­tion­al finan­cial infra­struc­ture. While some insti­tu­tions can access DeFi direct­ly, doing so remains oper­a­tional­ly com­plex and often unclear.

 

Secu­ri­ti­za­tion isn’t a workaround — it’s the unlock. When done right, it turns cryp­to yield into reg­u­lat­ed, investable prod­ucts that belong in every insti­tu­tion­al portfolio.

 

 

If you’d like to learn more about our Reserve pow­ered prod­ucts, read below;

• ETH+
• USD3

 

Want to struc­ture your own prod­uct? Con­tact us here

• Con­tact us