For digital assets to fulfill their promise of providing real-time, borderless, programmable finance, the blockchains powering them must become mature enough for institutional use.
Institutional adoption of digital assets like cryptocurrencies and tokenized securities is increasingly seen as inevitable. Yet, despite growing interest, risk remains an obstacle.
Unlike the early days of crypto, where anonymity and privacy reigned supreme, the new wave of adoption is being led by highly regulated institutions. Banks, asset managers and payment processors must know who bears the liability when things go wrong.
Cracking that code could help unlock the future of payments.
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As the traditional financial sector grapples with the core question of risk across the blockchain, crypto is continuing its linear journey toward mainstream adoption.
Securities and Exchange Commission Chairman Paul Atkins said Monday (May 12) that the commission must consider regulatory changes to accommodate on-chain securities and other crypto assets. The same day, Deutsche Bank analysts claimed in a statement to PYMNTS that regulation in the United States “could cement stablecoin legitimacy in 2025.”
It was also reported Monday that Citi predicted that new regulatory efforts promoting the integration of dollar-pegged coins into the mainstream economy might soon make the stablecoin market surpass the larger cryptocurrency ecosystem.
These are not blockchain businesses harbored in the Bahamas or tied to another offshore haven; they’re some of the world’s largest and most regulated financial institutions.
Still, at the core of crypto’s institutional future remains the risk of exposure without control. In traditional finance, firms have well-established risk management frameworks. They understand their counterparty risks, leverage positions and operational vulnerabilities. But digital assets — especially those on public chains — break that model.
“Banks are in the state where they are thinking about blockchains as public infrastructure that they need to rely on,” Chainalysis co-founder and CEO Jonathan Levin told PYMNTS in April.
“Without a federal framework, it is incredibly difficult for financial services firms and international enterprises to really get comfortable in using stablecoins at scale,” he added.
Transactions may settle instantly across blockchains, but recourse is minimal. Smart contracts execute automatically, regardless of intent or context. While blockchain forensics have come a long way, they are still retroactive tools that are frequently more reactive than they are preventative. There’s often no clear path to indemnity when a smart contract fails or when money is stolen via a protocol exploit, which means that traditional players are being asked to take on new risks without any of the traditional controls.
See also: Crypto Firms Chase Bank Charters as Circle Launches Stablecoin Orchestration Layer
Infrastructure providers are working to embed risk management into the fabric of digital asset platforms. Custodians are improving insurance coverage. Chain analytics firms are helping institutions monitor wallet activity and flag suspicious transactions in real time.
“This isn’t about replacing existing systems,” FV Bank CEO Miles Paschini told PYMNTS in January. “It’s about providing an additional option. Where stablecoins offer superior benefits, customers will naturally gravitate toward them.”
“As more banks integrate blockchain capabilities, customers will have greater choice in transferring value,” he added.
The PYMNTS Intelligence report “Blockchain’s Benefits for Regulated Industries” found that blockchain technology has numerous potential benefits to serve the unique needs of regulated industries, including finance.
However, the sector’s maturation could ultimately mean embracing risk not as a deterrent, but as a design challenge. It may mean developing systems where transparency is matched by accountability, and where innovation is underpinned by trust.
Even so, risk is not just a matter of auditability or reserve backing. It’s about systemic accountability. To do that, the industry must make risk visible, manageable and assignable.
Until then, the digital asset revolution could remain stuck in a holding pattern.
