“There Is No Pure-Play Venue Today”: David Martin Of Cleat Street On Institutional Crypto Collateral Limits

What Happened

A venture capitalist David Martin has known since 2015 recently called him with an unusual question. The man on the other end had been primarily investing in the Ethereum ecosystem since Martin first met him, a software developer who fell in love with Ethereum and its applications and had never worked in finance.

Over the past year, crypto-related activity has increasingly migrated into regulated wrappers. Exchange-traded funds, digital asset treasuries, and publicly listed crypto companies are generating a growing share of institutional flow. Options tied to BlackRock’s IBIT reached nearly $38 billion in open interest, surpassing Deribit’s $32 billion, a venue that had dominated Bitcoin derivatives since its founding in 2016. IBIT only launched options trading in November 2024, making its rapid ascent all the more striking.

Market Context

“I was shocked,” Martin told BeInCrypto in an exclusive interview at Liquidity Summit 2026 in Hong Kong. He added:

“The thought of this person, who is such a crypto DeFi degenerate, now wanting access to the ETF market, I think that is the staple of what’s going on right now.”

Martin checked the figures the morning of this interview. The gap had widened further. By January 2026, IBIT accounted for 52% of total Bitcoin options open interest, an all-time high level of market share, while Deribit’s dominance had slipped below 39% from more than 90% five years ago.

At the same time, roughly 30% of Bitcoin spot flow is now trading through vehicles tied to TradFi equities or exchange-traded products, a shift that reflects institutions structuring their crypto exposure to fit within existing risk and reporting frameworks.

“You’re seeing a fundamental shift to regulated products that traditional institutions are accessing. I think that speaks volumes for what people have been building in the crypto space over the past few years.”

Where Capital Efficiency Breaks Down

Participation has widened. But capital remains segmented across spot markets, equities, and derivatives, with no unified system to move between them efficiently.

Martin is precise about where this concentrates. “There’s no real pure play place in the market today that can take your Coinbase stock as collateral to buy crypto derivatives or Bitcoin.”

Martin sees two paths toward closing this gap. Firms like Clear Street are building from the traditional side, creating the rails that allow capital to move fluidly between asset classes within a single institutional framework. The parallel path runs through blockchain-native tokenization, bringing traditional assets on-chain so that collateral and settlement can happen within a unified system without the friction of moving between siloed infrastructure.

Why It Matters

He wanted to know whether he could convert his ETH into an ETF, then use that position on margin to buy crypto-related equities.

The Revenue Signal That Actually Matters

A manager who wants to use an equity position to fund a derivatives trade in crypto has to liquidate first, taking on execution risk and tax consequences that a unified system would eliminate.

Martin acknowledges that competitive dynamics are also at play, not just opportunity. When the point was raised in conversation, he agreed without hesitation. As more managers move into traditional wrappers, staying out begins to look like a strategic disadvantage rather than a principled position. Remaining on the sidelines when enough of your peers have moved carries its own risk.

Details

It is also, in a single anecdote, the clearest illustration of the problem Martin has spent his first weeks at Clear Street trying to solve. The infrastructure that was supposed to bridge these two worlds does not yet exist in any complete form. And the people who need it most are already moving faster than the systems built to support them.

ETF inflows make headlines. But Martin, who recently joined Clear Street as Chief Revenue Officer for Digital Asset, argues that revenue patterns tell a more precise story about where institutional conviction is actually sitting.

What it also reveals, underneath the inflow numbers, is a friction point that has not been solved.

For portfolio managers now operating across both asset classes simultaneously, that is not an abstract limitation. It is a constraint they hit on a daily basis.

The shift happened faster than the infrastructure supporting it. Crypto-native funds that once held only digital assets now routinely carry a third or more of their portfolios in TradFi-related equities. Those positions sit in separate systems, managed by different brokers, with no mechanism for cross-collateralization.

“The end state is that crypto just becomes another asset class, and you should be able to intermediate it with other asset classes.”

That convergence is already visible in portfolio construction, as crypto-native managers increasingly rely on traditional brokerage infrastructure while retaining digital asset exposure. The gap between where portfolios are and where the supporting infrastructure is has become one of the defining operational tensions in institutional crypto right now.

The Competitive Fear Driving Allocation Decisions

That call reflects something Martin has been hearing consistently since joining Clear Street. Across the larger crypto asset managers he has spoken with, the pattern holds. A year ago, almost none of them held anything in TradFi assets. Today, the most institutional-grade among them have at least 25% to 30% of their portfolio in TradFi-related stocks.