The Crypto Industry Hits a Wall

The crypto industry is hitting a wall. Big banks, investment firms, and financial giants are already handling billions in blockchain transactions, yet full-scale adoption in traditional finance is still far off.

The problem, according to a Bloomberg feature report, is that regulation is a mess, infrastructure is weak, and institutions still don’t understand crypto well enough.

With Donald Trump back in the White House, the U.S. is taking a pro-crypto stance, and Europe’s Markets in Crypto-Assets (MiCA) regulation is now in effect. Wall Street executives are analyzing what it will take for crypto to move from the edges of finance to the center.

Regulatory Confusion Slows Institutional Crypto Adoption

Naveen Mallela, the co-head of Kinexys by JPMorgan, says clear rules and better cooperation between regulators and businesses are necessary.

> “Greater regulatory clarity, widespread industry collaboration, and strong public-private partnerships will be the key elements for the scaling of digital assets in traditional finance.”

JPMorgan’s Kinexys Digital Payments, a blockchain-based payment system, is already processing more than $2 billion per day.

Caroline Butler, the global head of digital assets at BNY Mellon, says a strong institutional-grade blockchain infrastructure that connects crypto and traditional finance is essential.

> “Over the next 12 to 36 months, we anticipate an acceleration stage where digital assets will mature and integrate deeper into the financial ecosystem.”

BNY Mellon is already a major player, offering fund services for U.S. crypto ETFs, acting as a custodian for BlackRock’s tokenized money-market fund BUIDL, and participating in the European Investment Bank’s digital bond issuance.

John O’Neill, the group head of digital assets at HSBC, advocates for tokenized deposits to speed up digital asset adoption.

> “HSBC believes that safe, reliable forms of digital money, such as tokenized deposits, can speed up digital asset adoption.”

HSBC has issued multiple digital bonds, including a $128 million digitally native bond in 2024.

Jean-Marc Stenger, the CEO of Societe Generale-FORGE, highlights Republican support for crypto as a game-changer. He emphasizes that Europe’s MiCA regulation provides a clear rulebook for crypto markets.

Stenger’s firm, FORGE, has been involved in digital bond issuances and launched EURCV, the first euro stablecoin issued by a major bank.

Artem Korenyuk, the head of digital assets at Citi, supports the call for regulatory clarity.

> “We are encouraged by the growing focus on establishing regulatory clarity for digital assets in the U.S.”

Citi has developed Citi Token Services, allowing corporate clients to send blockchain-based payments.

Public Blockchains vs. Private Blockchains: Where Do Institutions Stand?

Robert Mitchnick, head of digital assets at BlackRock, states that public blockchains have outperformed private ones.

> “Public blockchains have been the clear winner over their private blockchain counterparts in terms of activity levels and adoption.”

BlackRock runs two major crypto ETFs, including the iShares Bitcoin Trust, which quickly reached $50 billion in assets, and manages BUIDL, a tokenized money-market fund on Ethereum worth $1 billion.

John Whelan, the managing director of crypto at Banco Santander, asserts that traditional finance needs regulatory approval for public blockchains.

> “TradFi will need to seek explicit regulatory clearance to use public blockchains because that is where true innovation exists.”

Santander has been developing digital securities, collateral mobility, and digital cash.

Julian Sawyer, the CEO of Zodia Custody, warns that compliance issues hinder traditional finance’s full embrace of crypto.

> “Traditional financial institutions cannot venture into digital assets until they can ensure compliance with the complex operating requirements already in place.”

Zodia Custody, backed by Standard Chartered, collaborates with Invesco and ETF issuers like 21Shares and Bitwise.

Jorgen Ouaknine, the group head of innovation at Euroclear, emphasizes standardization for mainstream crypto adoption.

> “Standardization has been the critical factor behind the successful scaling of nearly every major technological and financial innovation throughout history.”

Euroclear has been testing blockchain solutions for bond issuance and market liquidity.

Education and Collaboration Remain Major Roadblocks

Mike O’Reilly, president of Fidelity Digital Assets, cites education gaps as a barrier to crypto adoption.

> “Education — or lack thereof — is one of the biggest drivers — or deterrents — of adoption in the crypto space.”

Fidelity provides crypto custody and execution services for Bitcoin, Ether, and Litecoin and runs Fidelity Crypto, enabling trading for retail and wealth managers.

Jez Mohideen, CEO of Laser Digital, highlights a lack of understanding among institutions about crypto, Web3, and tokenization.

> “By investing in targeted education and fostering a deeper understanding of the opportunities and advantages blockchain-enabled products and services provide, institutions can position themselves to engage more effectively.”

Laser Digital, backed by Nomura Holdings, offers crypto trading, asset management, and treasury services.

Nadine Chakar, global head of digital assets at DTCC, stresses the need for collaboration instead of operating in silos.

> “It’s simple: we need to stop experimenting in silos and start collaborating industry-wide to realize the full potential of blockchain in financial services.”

DTCC acquired blockchain startup Securrency in 2023 and launched a tokenization sandbox for financial institutions.

Sandy Kaul, head of digital assets at Franklin Templeton, observes that U.S. regulators are now advocating for public blockchain adoption.

> “This should remove existing roadblocks that are inhibiting the coming together of the traditional and crypto ecosystems.”

Franklin Templeton has expanded its blockchain-based financial services and tokenized assets.

Laurence Arnold, global head of innovation at AXA IM, believes digital currencies need to resemble fiat currencies to be effective.

> “These digital currencies could be private or public but need to have the same characteristics as fiat currencies.”

AXA IM has collaborated with the European Central Bank on digital currency development and invested €3 million in Slovenia’s digital bond.

Hyder Jaffrey, head of strategic ventures at UBS, says institutions need clear rules for deeper engagement with crypto. UBS is involved in digital bond issuances and digital systems for global payments.