In this week's Crypto Long & Short, Ben Nadareski contends that attracting large investors requires DeFi developers to operate as accountable asset managers rather than just coders. Meanwhile, Stephen Stonberg discusses how bitcoin holders can endure downturns and safeguard their investments by generating income through reinsurance.
By Ben Nadareski, Stephen Stonberg|Edited by Alexandra LevisUpdated Jun 10, 2026, 4:27 p.m. Published Jun 10, 2026, 4:20 p.m. 8 min readMake preferred on (Chris Becker/ Unsplash)What to know:
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Welcome to our institutional newsletter, Crypto Long & Short. This week:
- To win over big investors, DeFi builders must act like accountable money managers, not just software developers, writes Ben Nadareski.
- Bitcoin holders can survive crashes and protect their assets by earning income through reinsurance, says Stephen Stonberg.
- Key news updates for institutions from Helene Braun.
- “Hyperliquid's 70% Rally: What Drove HYPE from $40 to $75 in Six Weeks” in Chart of the Week.
Expert Insights
Who responds to DeFi emergencies?
By Ben Nadareski, co-founder and CEO of Solstice
Recently, I shared insights with CoinDesk that I believe merit further exploration. A brief interview couldn’t capture the full essence. I propose that those engaged in DeFi should view themselves as financial asset managers who happen to write software, rather than merely a coding team managing funds.
Some individuals disagreed, so let me elaborate: what institutions truly seek from us is largely unrelated to the technical aspects. They want to resolve a fundamental question: “When issues arise, who do we contact?”
Currently, the response is no one. The code dictates the terms: there is no corporation, jurisdiction, or identifiable individual accountable. For some time, we marketed this as our unique selling point (USP), and I understand its appeal. “Trust the contract, not the individual” can seem like a safer choice, but if you engage with a risk committee, it becomes apparent how unusual that notion is to them.
They don’t evaluate code; they evaluate individuals and systems. They want clarity on who authorized actions, who has the authority to transfer funds, what procedures are in place at 3am if a key is compromised, and who has considered these risks. If you present them with an exceptional protocol developed by an anonymous team, managed by a multisig wallet controlled by individuals who have never met, the committee will not view it as a cutting-edge solution. Instead, they will perceive it as an operational risk that remains unquantified.
Thus, I have concluded that the accountability they require is essential for the maturation of decentralization. It allows for maintaining openness, composability, and permissionless frameworks while still addressing the fundamental inquiries any responsible financial manager should answer.
What does this entail in practice? It involves having reserves that can be verified in real-time, enabling anyone to assess solvency rather than relying on claims made in a blog or press release. It necessitates safeguards to ensure that no single individual can independently move substantial funds, as that’s standard in well-managed institutions (and it’s embarrassing that many protocols fail to adhere to this). None of these expectations are excessive; they represent the minimum standards.
I understand the skepticism. Critics may argue that this compromises the speed that makes crypto appealing. However, I view it differently. Rapid development is a benefit, but accelerating the handling of others’ funds (with no accountability) is not speed; it’s merely risk waiting for a crisis. April demonstrated some of these pressing timelines, and more will follow.
The audience for getting this right has already shifted. The institutions everyone anticipates aren’t on their way; they are already here, managing substantial funds on these platforms while the sector debates their involvement. The platforms that will thrive in the coming years will be those capable of integrating a Galaxy or Susquehanna alongside someone in Lagos opening their first wallet. Both should have equal access and protections, and both should understand who is accountable in critical situations.
That’s the standard I aspire for us to meet, and I want it to exceed that of traditional banks — not to be on par with them. Not because regulators are looming, although they are. The more challenging question is whether we will construct this ourselves or wait for external forces to compel us to act.
Principled Perspectives
A historic solution to bitcoin's yield issue
By Stephen Stonberg, CEO and co-founder, Tabit Insurance
Bitcoin investors face a conundrum: how to maintain ownership during market volatility without resorting to actions that could harm long-term value? The solution isn’t another “crypto yield wrapper.” As bitcoin BTC$62,162.18 adoption progresses, a time-honored financial structure is emerging as a viable alternative: reinsurance.
BTC is trading significantly below its 2025 peaks, leading to doubts across the investment community. Those who build enduring wealth are not typically those who can predict market bottoms or evade downturns; they are the ones who can endure corrections without being compelled to sell. This necessitates a method to generate income from a long-term bitcoin investment without depending on bitcoin’s price fluctuations.
Why traditional bitcoin yield strategies fail under stress
Most yield strategies fall into two categories: options strategies that capitalize on volatility, and lending platforms that rehypothecate assets. Both tend to falter precisely when market pressure arises. Options strategies expose investors to path dependency, volatility regime shifts, and counterparty risks, with yield disappearing during margin calls. Lending platforms may be even worse: bitcoin gets lost in obscure collateral chains, and once liquidity vanishes, so does the capital supporting it.
Reinsurance offers a fundamentally different yield source
Reinsurance serves as insurance for insurance companies, enabling primary insurers to offload parts of their risk portfolios to mitigate exposure to catastrophic events. These contracts function independently from financial markets, resulting in a distinct return profile that merges underwriting profits with conservative leverage, a proven strategy that predates cryptocurrency by hundreds of years.
The key takeaway is that reinsurance returns hinge on real-world risk assessment and pricing rather than bitcoin's market price. For instance, hurricane risk in Florida remains unaffected by whether bitcoin is priced at $40,000 or $100,000. This creates historically low correlation with both crypto markets and public equity beta, offering genuine diversification rather than merely repackaging the same underlying risks.
The mechanics
The structure is straightforward: post bitcoin as capital in a regulated (re)insurance entity, issue USD-denominated policies, and collect premiums in dollars. Reserves are maintained in cash and cash equivalents, utilizing standard trust and custody practices, keeping the bitcoin secured as capital and not rehypothecated. Reinsurance holds a structural advantage here. BTC remains in institutional-grade custody within a corporate framework designed to legally segregate different investors’ assets, allowing investors to have 24/7 on-chain verification of their bitcoin capital. This preserves the fundamental goal: retaining BTC exposure for long-term appreciation while generating dollar cash flows from uncorrelated reinsurance premiums.
Why institutions should explore reinsurance
Recent 13F filings indicate that long-term institutional investors are not all rushing to divest. Certain endowments, public pension funds, and sovereign wealth-backed investors have either increased or maintained their bitcoin ETF exposure during the downturn, highlighting that sophisticated allocators increasingly view regulated bitcoin exposure as a long-term investment rather than a purely tactical move.
However, maintaining a bitcoin position is easier to justify when it can produce cash flow without relying solely on price appreciation. Reinsurance operates within established regulatory frameworks, backed by actuarial discipline, underwriting controls, and capital adequacy standards. For institutions with a long-term perspective, this distinction is significant. The goal is not to pursue incremental yield by taking on additional crypto-native risks. Instead, it is to retain bitcoin exposure, earn dollar-denominated income from an independent risk pool, and reduce the likelihood that market pressures force a sale at the most inopportune moment.
Headlines of the week
By Helene Braun
A previously inactive Satoshi-era bitcoin wallet has been accessed after 14 years as its holder became embroiled in a $285 billion lawsuit, with notification sent through Bitcoin's blockchain; institutional investors continued to withdraw funds from bitcoin ETFs even as BTC approached the $60,000 mark that drew buyers earlier in the year; and DFG CEO James Wo, who transformed a $20 million family investment into a billion-dollar crypto firm, expressed optimism about bitcoin while questioning some aggressive price predictions for ether.
- Satoshi-era bitcoin involved in $285 billion lawsuit accessed after 14 years: The 1LwWt address received a legal notice from Salomon Brothers via Bitcoin's OP_RETURN field in July 2025 demanding the owner prove ownership by November 5, 2025.
- Bitcoin nearing $60,000 today vs February: Institutional sentiment has shifted: Bitcoin’s resurgence to $60,000 is leading to significant ETF outflows, contrasting sharply with February when institutional selling eased during the dip.
- A crypto pioneer who transformed a $20 million family stake into a billion-dollar fund reaffirms commitment to bitcoin: Sourcing initial capital from his mother to create a $1 billion crypto empire, DFG CEO James Wo states that current market metrics do not support Tom Lee’s prediction of $250,000 for ether.
Chart of the Week
Hyperliquid's 70% surge: what caused HYPE to jump from $40 to $75 in six weeks
HYPE climbed from approximately $44 to an all-time high of $75.52 over six weeks (early May to June 3), fueled by spot ETF launches from Bitwise and 21Shares which attracted over $130 million; the peak occurred on June 2–3 when TD Securities released the first significant bank report indicating Hyperliquid outpacing CME in oil price discovery, coinciding with Grayscale's launch of the HYPG ETF on the same day.
Listen. Read. Watch. Engage.
- Listen: $3 billion exits Bitcoin ETFs. Why Wall Street isn't worried. Jennifer Sanasie is joined by David LaValle to analyze a $2.97 billion outflow trend from Bitcoin ETFs, while Bloomberg's Eric Balchunas explains why these recent outflows may be more noise than meaningful signal, and Stellar Development Foundation CEO Denelle Dixon discusses DTCC’s choice to select Stellar.
- Read: In “Crypto for Advisors”, Beth Haddock reviews three due diligence questions advisors should consider in 2026. Additionally, Aaron Brogan discusses the GENIUS Act implementation timeline and the changes it will bring.
- Watch: “I will not support CLARITY until ethical issues are addressed.” Senator Angela Alsobrooks joins CoinDesk Policy Protocol hosts Rebecca Rettig and Renato Mariotti to discuss the three unresolved issues she needs resolved before voting on the CLARITY Act in the Senate.
- Engage: The CoinDesk: Policy & Regulation event is returning to Washington, D.C. on September 24. This one-day event connects lawmakers with chief legal officers, compliance officers, and policy experts to discuss the future of digital asset industry standards.
Looking for more? Stay updated with the latest crypto news from coindesk.com and market updates from coindesk.com/institutions.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.
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