Wall Street is finally embracing crypto—but the real payoff will come when it embraces DeFi
The global financial system, or what we broadly refer to as TradFi (Traditional Finance), is a $30+ trillion behemoth. Its reach spans commercial banking, global banking assets, insurance, capital markets, wealth management, and asset servicing. It touches every person, business, and institution, underpinning how value flows through the world.
Meanwhile, DeFi (Decentralized Finance), despite being the most transformational innovation to hit financial services in decades, remains a mere rounding error in that picture. Depending on how you measure it, via Total Value Locked (TVL), DeFi token market cap, protocol revenue, or institutional activity, DeFi’s footprint barely scratches $150 billion on a good day. That’s less than half a percent of TradFi’s scope.
This is not a failure. It is a testament to just how early we are. Seen more optimistically, it is an opening that holds the blueprint for the future of finance.
Already, we’ve seen DeFi recreate core banking functions entirely on-chain, including borrowing, lending, insurance, trading, asset management, and structured products. And it’s working. Millions of users, thousands of developers, and hundreds of projects are coalescing around this future.
DeFi’s growth, however, has been largely inward-looking, driven by crypto-native users rather than institutional money. And despite DeFi’s rapid-fire innovation, leading TradFi figures have mostly elected to watch from the sidelines, or worse, confine themselves to dismissive skepticism.
This underscores the need for a bridge between the old and the new. TradFi must integrate with DeFi, not just observe it. Not to co-opt it, but to scale it. Fortunately, there is a precedent for such integration.
Consider BlackRock’s game-changing embrace of Bitcoin ETFs in 2023–2024 (and later ETH). It didn’t just lend legitimacy, it unlocked institutional access at scale. Today, BlackRock has become the single largest TradFi driver of crypto adoption. It manages over $87 billion in spot Bitcoin ETF assets and $10 billion in ETH ETFs.
BlackRock is also leading in DeFi-adjacent areas. Its BUIDL fund, a tokenized U.S. Treasury fund issued mostly on Ethereum via Securitize, holds over $2.4 billion, almost 10% of the $25 billion tokenized asset market on-chain. It’s a direct example of TradFi using DeFi infrastructure without compromising regulatory standards.
Meanwhile, JP Morgan’s Kinexys division is working to bring financial assets on-chain. It has tested on-chain FX, repo, and tokenized bonds using permissioned DeFi liquidity pools. It is building infrastructure that mimics DeFi mechanics while staying within institutional compliance rails. This isn’t a crypto experiment; it’s the beginning of institutional DeFi.