BlackRock: Institutional Adoption of DeFi Not Happening Anytime Soon

World’s largest asset manager BlackRock stormed the crypto market with its filing of the spot Bitcoin ETF last week. Bitcoin and the broader cryptocurrency market have given a strong upswing with a flurry of Bitcoin ETF filings over the last week.

Although BlackRock seems optimistic about the institutional crypto adoption, it believes that similar participation by institutional players in decentralized finance (DeFi) will take many years from now.

Speaking at the Coinbase Global Inc.’s State of Crypto Summit, Joseph Chalom, BlackRock’s head of strategic partnerships, said that the company has been discussing with its clients the implications of DeFi, and the regulatory hurdles that they need to overcome.

However, Chalom added that institutional adoption of DeFi will still be “many, many, many years away”. “Not that I’m pessimistic — I just live in a highly regulated space and so do our clients,” he said.

BlackRock and Coinbase

During his recent address, Chalom said that crypto players like Coinbase have a role to play and serve as a bridge between traditional investors and DeFi, since they offer institutional-grade wallets.

Interestingly, BlackRock has chosen Coinbase as the custodial service provider despite the fact that the SEC slapped a lawsuit against the exchange earlier this year. Many in the crypto circle believe that this could help the SEC reach a faster settlement with Coinbase.

Crypto exchange Coinbase has been serving institutional investors for a while offering regulated custodial services. It also manages the cash reserves of USDC stablecoin issuer Circle.

Chalom also said that BlackRock is actively exploring tokenization and stablecoins as key areas of interest. The company has been engaging in discussions with clients regarding the potential use of well-backed stablecoins in facilitating the movement of institutional funds.

Recently, Fed Chair Jerome Powell also spoke about the need of having a regulatory framework for stablecoins while acknowledging that stablecoins are a form of money and cryptocurrencies, like Bitcoin, have ‘staying power’ as an asset class.