Decentralized financial growth (defi) JPMorgan’s Nikolaos Panigirtzoglou said in a research note on Wednesday that asset tokenization continues to overwhelm people.
Total value locked (TVL) The report notes that in Defi, DEFI stays below the highs of 2021, and most activity remains driven by crypto-local and retail users.
Panigirtzoglou wrote that despite the development of compliance infrastructure, such as licensed loan pools and KYC-enabled vaults, institutional adoption remains behind.
There are still major obstacles. Analysts write that institutions are facing regulatory splits, legal uncertainty surrounding chain assets and concerns about the security of smart contracts. As a result, most institutional crypto activities are still concentrated in Bitcoin
.
Tokenization is also difficult to deliver. The bank said that while the industry has attracted some appeal, with $25 billion in token assets, $8 billion in token bonds and rising adoption of money market funds, most plans remain small, liquid or experimental. Outstanding efforts such as Blackrock tender and Broadridge Distributed ledger repository (DLR) Platforms provide increased efficiency, but lack scale.
Panigirtzoglou notes that in the private market, tokenization is concentrated among a few participants, and there is a lack of meaningful secondary market activity.
Many traditional investors remain skeptical, especially given the transparency of blockchain, which is a disadvantage of an institution that prefers opaque trading venues such as dark pools, the report said. This preference is illustrated by the continued growth of non-exchange equity transactions.
Despite regulatory plans such as the SEC’s “Project Crypto,” PanigirtZoglou doubts whether the separate rules can overcome a deeper problem: traditional finance has not seen a clear need for blockchain.
Fintech has increased speed and efficiency in current systems and reduced the urgency of adopting tokenized alternatives, the report added.
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