This Week in Crypto: Bitcoin ETF Demand Builds as Banks Move Onchain
This week in crypto, institutional demand continued to strengthen as Bitcoin ETFs recorded their best run of inflows in months, while the connection between traditional banking and blockchain technology moved another step forward. In the United States, thousands of banks are being represented in plans for an industry-owned blockchain network, while the UK is preparing to formally add payments innovation and emerging forms of digital money to the Bank of England's responsibilities. Meanwhile, BNB Chain completed a major network upgrade focused on security and transaction capacity. Together, the developments point to a broader shift taking place across crypto, with investment, banking infrastructure and regulation increasingly moving in the same direction.
US spot Bitcoin ETFs extended their run of net inflows to seven consecutive trading days on Tuesday, bringing August inflows above US$3 billion. That puts the month within reach of October 2025's total, with several trading sessions still remaining. If the momentum continues, August could become the strongest month for Bitcoin ETF inflows since October.
The turnaround is particularly notable given how differently the year began. The recent recovery has already reduced the ETFs' year-to-date net outflow position by more than half, while total assets across US spot Bitcoin ETFs have climbed to around US$99 billion. Bitcoin also briefly moved above US$80,000 during the week before pulling back, suggesting ETF demand has remained resilient even as the market continues to experience periods of volatility.
A closer look at the flows also shows where much of that demand is coming from. BlackRock's IBIT accounted for the vast majority of Tuesday's net inflows, continuing its position as the dominant US spot Bitcoin ETF. The broader trend was not limited to Bitcoin either, with US spot Ether ETFs recording their own seven-session inflow streak. The simultaneous recovery across both products provides another indication that institutional demand for regulated crypto exposure has strengthened following a much quieter period earlier in the year.
Away from markets, one of the week's more significant developments came from the US banking sector. Thirty-nine state bankers associations announced the formation of the BankChain Alliance, an initiative to create an industry-owned, industry-designed and industry-governed blockchain network for financial institutions. The associations collectively represent thousands of banks across the United States, giving the project a potentially significant footprint if it progresses as planned.
The proposed network is targeting a 2027 launch and is being designed to support services including tokenised deposits, stablecoins, smart payment tools and automated settlement. Importantly, the Alliance says the network will be interoperable with other blockchain systems rather than operating entirely in isolation. A technology partner has not yet been selected, meaning the project remains at an early stage, but the scale of the organisations behind it makes the announcement notable.
The motivation is also different from many of the large-bank blockchain projects seen previously. BankChain is intended to give community and regional banks access to digital payment infrastructure that would otherwise be expensive and complex to build independently. Rather than blockchain infrastructure being concentrated among major institutions such as JPMorgan, smaller banks could potentially share access to common infrastructure while maintaining existing banking and regulatory standards.
It also comes as the US banking industry's approach to stablecoins appears to be evolving. Major institutions have been exploring different forms of tokenised money, while the BankChain initiative explicitly leaves room for both tokenised bank deposits and stablecoins. The distinction is important: rather than blockchain technology sitting outside the traditional banking system, banks are increasingly exploring how it could become part of their own payment and settlement infrastructure.
Across the Atlantic, the UK government announced another step toward integrating digital money into the regulated financial system. HM Treasury intends to give the Bank of England a new secondary objective to support innovation in payment systems and emerging forms of digital money. Financial stability will remain the Bank's primary responsibility, but the new mandate would require it to also consider how regulation can support innovation, including payment systems using digital settlement assets such as stablecoins.
The move forms part of a much broader effort to modernise the UK's payments system. It also follows an agreement between the UK and US governments that specifically recognised stablecoins, tokenised deposits and other forms of digital money as areas for greater regulatory cooperation. The two countries have said they want well-regulated stablecoins to be usable across payments, settlement and cross-border transactions, while working toward greater compatibility between their respective regulatory frameworks.
That direction is significant because stablecoin regulation is increasingly moving beyond the question of whether the technology should be permitted. Governments and financial institutions are now considering how different forms of digital money could coexist, how they can move between jurisdictions and how they might integrate with existing banking and capital-market infrastructure. The UK's latest proposal would embed innovation more directly into the Bank of England's regulatory responsibilities, while still placing financial stability first.
Blockchain infrastructure also continued to evolve this week, with BNB Smart Chain activating its Pasteur hard fork. The upgrade focuses primarily on strengthening cross-chain bridge verification, improving validator security and increasing the amount of transaction activity that can fit into each block.
Among the changes, Pasteur prevents duplicate validator entries from being counted during cross-chain verification and tightens controls around validator key changes, reducing the ability of retired keys to retain authority. Another improvement changes how blocks can be submitted and verified, designed to give the network greater transaction capacity without slowing its existing block times. Testing showed a significant improvement in throughput, although these results should not be treated as measured mainnet performance.
While the individual developments this week span investment products, banking, regulation and blockchain infrastructure, they share a common theme. Crypto's integration with traditional finance is increasingly happening at the infrastructure level. Investors are accessing Bitcoin and Ethereum through regulated ETFs, banks are exploring their own blockchain payment networks, governments are building frameworks for stablecoins and major blockchain networks continue to strengthen the technology underneath them.
The next few months will show whether the recent ETF momentum can continue and how quickly initiatives such as BankChain progress from planning to implementation. What is becoming clearer is that the conversation around blockchain is expanding beyond crypto markets themselves, with traditional financial institutions increasingly looking at how the technology could fit into the future of payments, settlement and digital money.
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