Institutional-grade structuring for CIOs and PMs seeking policy-aligned digital asset participation
For CIOs and PMs managing digital asset exposure or responding to client demand, this is a leading and viable institutional mechanism.
We recently worked with a large Digital Asset Fund Manager to design a structure that delivers participation in Bitcoin’s upside, while protecting capital at maturity. It had to be operationally clean, custody-free, governance-aligned, and tenable for institutional balance sheets.
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What emerged is a capital-protected investment note issued by a FINMA-regulated investment grade bank, referencing a rules-based Bitcoin futures index with a built-in 23% volatility target.
The structure avoids exposure to spot BTC or perpetuals. Instead, it uses listed CME futures, rebalanced daily to control downside volatility and reduce structural risk. Participation rates vary with tenor and interest rate conditions. The note can also be packaged into smaller units by distributors, offering flexibility across client segments.
What makes this different from typical Bitcoin exposure?
1. No spot custody or wallet infrastructure
The note avoids custodial complexity and eliminates direct exposure to on-chain wallets or exchange risk. CIOs can hold this note alongside standard fixed income or credit allocations without triggering compliance concerns.
2. Downside protection by a regulated investment bank
Capital is fully protected at maturity, subject to issuer performance. This meets the threshold for conservative mandates and fiduciary boards that prohibit outright crypto holdings.
3. Volatility-controlled exposure
The index scales exposure daily to maintain 23% volatility, providing more predictable risk contribution than directional Bitcoin. It limits the tail risk that often emerges during leverage-induced flash crashes.
4. Tenor-based participation rates
Investors can select from a range of maturity profiles. Examples include:
- 5Y: 100% capital protection / 72% participation
- 10Y: 100% capital protection / 140% participation
- 15Y: 100% capital protection / 220% participation
- 20Y: 100% capital protection / 310% participation
5. Packaged access for downstream distribution
While the institutional minimum allocation starts at USD 5 million, top-ups begin at USD 100,000 and distributors can break units into USD 1,000 tranches for qualified clients under local wrappers.
Who is this for?
- CIOs and portfolio managers seeking policy-aligned BTC participation
- Distributors and private banks needing KYC-compliant downstream access
- Fund of funds, insurers, family offices needing balance-sheet neutral exposure
- Wealth teams with structurally conservative mandates who can’t hold crypto directly
Why it matters now
Recent liquidation cascades and leverage-driven flash crashes in digital assets underscore a simple reality: structural leverage risk is now the biggest driver of intraday downside.
As seen in last week’s $577 million long wipeout in Bitcoin, exposure through perpetuals or margin-based systems can evaporate institutional capital in minutes. These are not volatility events, they are structural unwind events.
This structure is built precisely to avoid that.
How to engage
If you manage client AuM, operate an institutional strategy, or advise allocators exploring BTC, this structure may align with your mandate.
Get in touch via LinkedIn or X (@terrencewalsh1). We will send the full one-pager, scenario analysis, and indicative terms.
Originally posted in Substack