The growth of decentralized funding (Defi) And Activities continue to overwhelm, Jpmorgan’s Nikolao’s Panigirtzoglou said in a research report Wednesday with reference to the stagnant improvement since 2022 Crypto Winter.
Total value locked (Tvl) In Defi, below 2021 heights remain, with most activities still driven by crypto-natives and retail users, the report noted.
Institutional adoption is delayed despite the development of compliance-ready infrastructure, such as permitted lending pools and KYC-activated vaults, Panigirtzoglou wrote.
Big barriers are back. Institutions are facing legislative fragmentation, legal uncertainty about assets on the chain and concerns about smart contract security, the analysts wrote. As a result, most institutional crypto activities remain concentrated in Bitcoin
.
Tokenization has also struggled to deliver. While the sector has seen some traction of $ 25 billion in tokenized assets, $ 8 billion in tokenized bonds and growing adoption in money market funds, most initiatives remain small, illiquid or experimental, the bank said. Prominent efforts like Blackrocks Buidl and Broadridge’s Distributed headbox (DLR) Platform offers efficiency gains but lacks scale.
Panigirtzoglou noted that tokenization in private markets is heavily concentrated among a few players and lacks meaningful secondary market activity.
Many traditional investors remain skeptical, especially considering Blockchain’s transparency, a disadvantage for institutions that favors opaque trading sites such as dark pools, according to the report. The continued increase in trading in equity outside the exchange illustrates this preference.
Despite legislative initiatives such as SEC’s “Project Crypto”, Panigirtzoglou doubts whether rule changes alone can overcome the deeper question: Traditional funding does not yet see a clear need for blockchain.
Fintech has already improved speed and efficiency within the current system, reducing the urgent to adopt tokenized alternatives, the report added.
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