Crypto's New Path: From Disintermediation to Institutional Integration

The original goal of crypto was to disintermediate finance by allowing individuals to send, hold, and manage money without traditional banks. However, after 15 years, many significant developments in the industry involve banks using blockchains for their own institutional clients.

JPMorgan now settles payments in its own deposit token on a public blockchain, while BlackRock's tokenized Treasury fund holds approximately $2.4 billion in assets under management. Visa and Mastercard also allow card issuers to settle daily obligations in stablecoins rather than wire transfers.

The shift away from disintermediation began with institutional decisions, such as banks piloting settlement products and card networks testing faster clearing methods. JPMorgan's blockchain unit, Kinexys, is a successful example of this trend, having processed over $3 trillion since its 2015 launch.

BlackRock has also pursued tokenization with its USD Institutional Digital Liquidity Fund, known as BUIDL, which holds the largest amount of assets under management in the category. The fund's growth has reshaped the competitive landscape among tokenized Treasury issuers and is now integrated into DeFi lending markets.

Regulation has played a significant role in this shift, with the GENIUS Act's stablecoin framework requiring crypto firms to build compliance infrastructure similar to traditional finance. This has led to a slower pace of innovation but greater durability, as institutions like BlackRock and JPMorgan provide stability through their balance sheets and institutional reputation.