CRYPTO– Large-scale institutional investments in decentralized finance (DeFi) are still a long way off, according to BlackRock Inc., a leading investment management firm. Until the regulatory issues are resolved, integrating DeFi into traditional institutional investing may take some time. Last Thursday, during the State of Crypto Summit organized by Coinbase Global Inc. and the Financial Times, Joseph Chalom, head of strategic partnerships at BlackRock, spoke on the subject. He explained the promise of the revolutionary DeFi crypto market, where blockchain technology automates trading. However, he stressed that widespread adoption of DeFi is not imminent due to the tight constraints under which BlackRock and its clients operate.
As Chalom said, “It’s not that I’m pessimistic – I just live in a highly regulated space, just like our customers.” Even if that happens, he said, widespread institutional adoption is still “many, many, many years away.” Despite the warning, Chalom noted the potential importance of services like Coinbase in bridging the gap between DeFi and traditional investors. The institutional-grade portfolios of these companies could make it easier for conventional investors to enter the cryptocurrency market.
It should be noted that BlackRock’s involvement in the cryptocurrency industry is nothing new. Bitcoin’s price soared last week after the investment giant requested a cash exchange-traded fund in the United States, prompting other issuers to follow suit. In the past, they have worked with Coinbase to make Bitcoin management and trading easier for large investors. BlackRock is also responsible for managing the reserves of USD Coin, the stablecoin issued by Circle Internet Financial.
Tokenization and stablecoins are important topics in BlackRock’s ongoing conversations with its customers. Well-reserved stablecoins are seen as particularly promising tools for facilitating the transfer of money between institutions. To include DeFi and cryptoassets in the future of institutional investing, Chalom’s views represent a cautious but promising move.