From Parallel to Integrated: What Institutions Need to Fully Embrace Digital Assets

• The biggest development over the past year is the clarity coming from the U.S.

• The panel is optimistic that current approaches to blockchain will lead to mainstream adoption.

• In some parts of the world, progress, though slow, has been happening

• Traditional firms are looking for secure, trusted counterparties to work with

The discussion focused on the evolving landscape of institutional digital asset trends, with regulatory clarity, particularly in the U.S., serving as a key driver for institutional entry. Among the crucial developments over the past year was the shift from pilot projects to business unit initiatives. Notably, key players such as JPMorgan and Goldman Sachs are showing increased interest.

Komainu Frost-Smith highlighted the importance of regulatory frameworks for institutional trust, emphasizing the need for clarity and integrity. “I think the biggest change, certainly over the last year, has been increasing noise and increasing clarity coming in the U.S.,” he said. “The U.S. interest and receptiveness to the technology is welcome and brings about a shift from innovation departments to business units in major banks, indicating a more serious approach to crypto,” he added.

The panel also highlighted the importance of operational readiness, including compliance and custody infrastructure, along with the potential for yield generation through tokenization and DeFi. The panelists also discussed the role of traditional hedge funds in integrating crypto managers and the need for robust counterparty risk.

“I think blockchain is going to go mainstream,” Chainlink’s Vázquez Cao said while pointing to the more favorable regulatory environment not just in the U.S. but also in places such as Japan and Singapore. Jurisdictions such as the UAE have also been forward-thinking on crypto, but market participants have been relatively slow to take advantage of the landscape, XBTO’s Naim said. 

“I think there's only one bank in the UAE today that offers crypto trade,” he said, noting that progress has been slow. For institutional investors, this is key, Theunis from DBS said, adding that an increasing number of traditional firms are asking questions and are actively looking to be educated, while noting that a lot of this is being driven from a demand rather than a supply point of view.

“They're looking for secure, trusted counterparties to work with,” she said. 

The conversation highlighted the importance of operational readiness, including compliance and custody infrastructure, and the potential for yield generation through tokenization and defi. The panelists also discussed the role of traditional hedge funds in integrating crypto managers and the need for robust counterparty risk.