Institutional Adoption Acceleration: Evolution and Challenges of Digital Asset Infrastructure

[Coin World] As traditional finance gradually understands the prospects of Blockchain, and with encryption-native innovators leading the way, the digital asset space is undergoing rapid transformation. Developments like tokenized stocks and modern security standards are driving dialogue within the industry globally. Adam Levine, Senior Vice President of Development and Partnerships at Fireblocks and CEO of Fireblocks Trust Company, is right at the intersection of these advancements. In Sunnycan on the French Riviera, Levine shared candid insights on regulatory progress, tokenization, and the current state of institutional Crypto Assets adoption.

Institutional understanding, adoption speed, and the constantly evolving risk curve

We see the conversation becoming more insightful, right? In the past, it always sought reasons to reject, whether pointing to regulations or claiming the technology was unworkable. But what we are now seeing is that traditional institutions are witnessing the proof of scale and speed that Blockchain can achieve from the Crypto Assets world. Now, they are starting to seriously consider how to leverage this technology to do things smarter and better. Therefore, the nature of the conversation is improving. Technical teams are really beginning to understand the differences in infrastructure across different protocols, as well as the limitations and opportunities of smart contracts. So overall, it's encouraging to see that they are no longer coming from a place of denial, but rather thinking about the possibilities of achieving business outcomes.

Banks have never been the fastest, which is not surprising, right? But the crypto-native teams that are always ahead can execute more quickly. They are different stakeholders. What we are seeing is that some of these crypto-native companies have evolved into more mature enterprises. Fintech companies and new banks are in between; they still have those stakeholders that require you to consider all different types of risks, but they act much faster than traditional banks. Therefore, once banks really take action, you will feel the impact, but it is definitely these crypto-native companies, as well as the new fintech companies, that are beginning to see the impact more quickly.

The rise of liquidity, interoperability, and Layer 2

We see from many aspects that whether it's Layer 1 or Layer 2, they have similar strategies when entering the market. They are looking for a niche market that can differentiate them, and they are leveraging their funds to provide truly important incentives to promote the industry's adoption of them. There is nothing wrong with that. It's a good thing. But this means that certain types of assets are being tokenized on one chain and not another. Now you have these different liquidity pools. You can say the same thing about stablecoins, right? Having USDC or USDT on one protocol, but wanting to purchase assets on another protocol, doesn't work, right? So you run into these issues, and many stablecoin providers say, great, I will get incentives delivered natively across multiple protocols. This is not the most efficient.

Therefore, it is exciting to see the innovations in interoperability. The companies we are closely working with, LayerZero, Ownera, Chainlink, and Wormhole, are all providing very important interoperability solutions that will help address the issue of tokenization on one Blockchain while needing to purchase its stablecoin on another Blockchain. People no longer need to think, well, there is USDC on Polygon, and there is also USDC on ETH, but I want to purchase assets on Base, what do I do now? These solutions are crucial, they come from Crypto Assets native projects, but even examples like Biddle and Kinexis as well as JPM rely on the real POC and production delivery from these temporary partners.

Security standards in Crypto Assets and MPC

MPC is the gold standard of security quality used by your wallet. The place where they control the keys is crucial. Unfortunately, many still believe that multi-signature is MPC or multi-party computation. Clearly, this is not the case. This may feel obvious, but we can point to some very public and very large hacks as examples of multi-signature behind the scenes. If you don't want to buy cheap fish or security, you need to focus on some version of MPC. Clearly, we believe our experience and proven resilience is where you need to start, but MPC needs to become the standard.

Regulatory Landscape and Progress of Digital Assets

I believe the industry has moved miles ahead compared to last year, which may be due to changes in the U.S. market. Every market regulator needs to consider their own concerns, and some regulators, such as VARA, have been ahead for some time. However, when I travel globally, I see large institutions wanting to know what will happen in the U.S. because it will be a landmark. In the initial weeks of this federal administration, some very significant changes have been made, signaling to both U.S. traditional finance participants and the world that tokenization of assets, blockchain, and crypto assets are permissible. We are now starting to see changes in the regulatory community. The "Genius Act" will be crucial not only domestically but also globally. This sends a message to banks, traditional participants, and payment service providers. They should lean into this.

Tokenization center and adoption of use cases

The tokenization engine is great. It allows you to use our smart contract library to tokenize anything you want. But what we are considering is a more open system. Therefore, if you have your own developed smart contracts, or smart contracts developed by one of your partners (such as Tokeny), and you want to bring them into Mint and Burn, you absolutely can. We have seen some very good use cases from some of our clients, such as tokenizing private debt, tokenizing equity, and bringing it to new markets. This is fantastic. We still see some strange edge cases where people want to tokenize investment-grade wine or resources. The tokenization engine works well.

What is not said on stage is: institutional DeFi and competitive response.

The announcement from a certain trading platform is absolutely fascinating. We've heard people talking about how Europeans can easily access US stocks through an astonishingly simple application. They are truly excited to see how other parts of the market and some big banks are responding. Therefore, it is not just about the impact on a certain trading platform and its products.

A recurring topic is how large asset management companies and hedge funds are adopting institutional DeFi, and when banks will start to facilitate this. This seems to be key.

Conclusion

Adam Levine from Fireblocks clearly demonstrates the rapid development of digital asset infrastructure, as traditional finance continues to steadily shift towards smarter adoption, while fintech companies and crypto native teams drive rapid innovation. The challenges of interoperability and liquidity are being addressed through advancements in protocol solutions, while security standards like MPC are setting new benchmarks. The evolving regulations are instilling much-needed confidence for institutions, and the surge in tokenization use cases indicates that a mature industry is ready for collaboration and mainstream success. The progress of the industry remains closely tied to the clarity of regulations, competitive fintech innovation, and a commitment to robust security and seamless interoperability.