The last 18 months or so have seen a shift in the world of cryptocurrency, and these cryptoassets are attracting the interest of various parts of the broader business community. This incremental interest on the part of financial analysts, governments, and investors is an indicator of a shift in the industry’s fortunes and its evolution to a new stage of maturity. The route from niche, decentralised experiment to mainstream financial asset class is well trodden and driven by the imperative of institutionalisation.
The Institutionalisation Imperative
At the heart of this transition is the institutionalisation of crypto, i.e., participation at scale by existing and new participants in the global financial services ecosystem. This is not just a question of big firms coming into the space; it’s about the creation of trust, introducing stability, and enabling the crypto market to see the scale that will introduce mass adoption. For crypto to come into its own as a true medium of exchange, a reliable store of value, or a foundation technology for a tokenised economy, it needs the underpinnings and direction that institutions can provide.
The most significant milestone along this path has been the listing and subsequent popularity of spot Bitcoin ETFs in the US. The iShares Bitcoin Trust ETF managed by BlackRock (IBIT) is a prime example. Within 18 months since it started in January 2024, it has become a giant overnight, holding more than 700,000 BTC in assets. This unsustainable surge, as noted by X’s K33 Head of Research Vetle Lunde, is an indication of the massive institutional demand. Nate Geraci, president of NovaDius Wealth Management, also seconded this view, calling the pace “ridiculous.” This pace of accumulating assets testifies to the eagerness of institutional investors to get exposed to Bitcoin in a comfortable, regulated format without the bother of ownership.
BlackRock’s IBIT already holds about 56% of the aggregate 1.25 million BTC held by all U.S. spot Bitcoin ETFs, reflecting its dominance in the market. Its success has not merely been BlackRock’s but has also validated the broader concept of crypto as an investment opportunity. Its AUM has made the fund BlackRock’s third-highest revenue-producing ETF, something observed by Bloomberg Senior ETF Analyst Eric Balchunas. Its success demonstrates the financial merit of crypto-associated products within traditional finance and points towards a very clear path forward for more institutional involvement.
Understanding Cryptoassets and Their Role
To gain an appreciation of the importance of this institutional change, it’s helpful to learn about what cryptoassets are and how they work. Defined in the broadest sense, cryptoassets are digital units of account that employ cryptographic methods to manage their creation and availability on a blockchain. This decentralised nature makes them independent of direct control by a central authority. But while the Investopedia team says that crypto is something unique to every individual: a speculative gamble, a value store like gold, a unit of exchange, or an immutable record of ownership.
Underpinning the tech, blockchain is a decentralised, distributed ledger that secures transactions and makes them virtually unforgeable. This safe, open platform can transform industries far beyond finance, from the law to supply chains, even elections. The flexibility of this technology has given rise to a variety of other forms of tokens, each designed to have a particular use. Utility tokens like XRP and ETH are designed for a particular usage on their respective blockchains, but transactional tokens like Bitcoin are designed to be used as a form of exchange. They encompass governance tokens that grant voting rights and security tokens that tokenise ownership of real-world assets.
Cryptoassets are promising, but do not have guarantees. The market is quite volatile, and prices are subject to drastic fluctuations. An example of this is the value of Bitcoin fluctuating dramatically when it reached close to 65,000, resurging in November 2021, but then dipping and then rising to a record of over 123,000 in the middle of 2025. This can be a highly speculative venture due to such volatility as well as risk of user and regulatory peril. To institutions, this risk profile will require regulated on-ramps to be established.
Challenges on the Path to Institutionalisation
While institutionalisation gets underway, there are a variety of key challenges that must be overcome for crypto to meet its full potential. For starters, there is regulatory ambiguity. While the U.S. and Europe have made progress, with the Markets in Crypto-Assets (MiCA) regulation entering into effect, the lawful status of cryptocurrencies remains ambiguous in most jurisdictions. As FATF has pointed out, wire transfers of cryptocurrencies should be AML-compliant with well-defined regulatory regimes. A July 2023 judicial ruling in the US holding cryptoassets as securities if they are purchased by institutional investors but not retail investors indicates there remains a regulatory grey area. For institutions to participate to their fullest potential, they must enjoy a clear, consistent, and harmonised globally regulatory architecture providing legal certainty and reducing compliance risk.
Cryptographic security is central to the functionality of digital assets
Security is also a major challenge. Blockchain technology itself is highly secure, but off-chain attacks like exchange and digital wallet hacks are a significant threat. Because there is no central authority, once the transaction has been started, it cannot be reversed. This user risk, with third-party custodian counterparty risks, management risks from fraudulent behavior, and programming risks from clever contract exploits, is an intimidating topography for institutions as well as new users. Institutional-quality custody solutions that are secure top the list of priorities. That is where firms such as Coinbase Prime, with more than $171 billion in institutional assets under custody, come into the equation. BlackRock’s decision to have Coinbase Prime as the custodian of its IBIT fund demonstrates the trust and integrity that such regulated exchanges can provide.
Secondly, the issue of market manipulation remains a cause for concern. Influential individuals, organizations, and exchanges can promote their favored tokens, leading to artificial price fluctuations. Without regulatory oversight and protection, retail investors, particularly, are easy targets for such manipulation.
The Path to Mass Adoption
For crypto to become a ubiquitous part of the global economy, rather than a niche technology, it needs to cross a critical threshold—a tipping point traditionally cited as 8-10% adoption. Once crossed, Nasdaq notes, the rate of adoption begins to “explode upwards.” Currently, with over 420 million users globally, crypto is closing in on this point.
The path to mass adoption is littered with an array of influential drivers:
- Improved Regulation: As stated, better regulatory systems are most critical. They promote confidence, reduce uncertainty for businesses and consumers alike, and enable mass institutional investment. The establishment of regulated international structures will be most critical for crypto to grow as a true global industry.
- Intuitive Design: If crypto is mainstreaming, the experience must be as smooth and frictionless as normal services. The average customer won’t tolerate complex setups or steep learning curves. As Mastercard’s VP Harold Bossé asserts, the technology must “disappear into the background.” Platforms and apps must be designed for the average user, with the technology going invisible and the experience seamless.
- Real-World Tangibility: Bridging the gap between the physical and digital worlds is yet another powerful push. Tokenisation of physical assets like property, commodities, and artwork brings the concept of blockchain within the grasp of the non-digital currency literate. Through securing title of physical objects on an open, tamper-resistant ledger, one can appreciate the potential of decentralised networks without the wild price swings of speculative tokens.
- Interoperability: The modern-day blockchain landscape is currently being fragmented within closed systems that operate independently. It will depend on increased interoperability between blockchains and non-blockchain sources of data. Solutions such as bridges and oracles will allow interoperability to provide at ease value and data trade, and their developers assist in the synthesis of complicated applications across blockchains. This would create a stimulus for the smooth merging of financial applications and commerce on a global scale.
- Facilitating Basic Services: Crypto can facilitate adoption by introducing access to basic services in areas where traditional alternatives have failed. In developing nations, for instance, decentralised financial products and payment systems can provide life-giving access in the face of currency instability and lack of essential infrastructure. The use of blockchain payment apps by Afghans during U.S. sanctions is a compelling signal of the role crypto can play in solving real-world problems under extreme circumstances.
Closing Thoughts
Cryptoassets are increasingly becoming integrated into our global economic and technological fabric
Crypto’s development from a niche technology to a legitimate financial asset class is a compelling tale of innovation and adjustment. While challenges remain to be solved, the push toward institutionalisation is irreversible. The fact that institutions such as Coinbase can provide institutional-grade infrastructure and market leadership with products such as BlackRock’s IBIT is an indication that mainstream finance is no longer on the sidelines. The position of the Canadian market as a first-mover in the approval of physically settled Bitcoin ETFs laid the groundwork for such a worldwide trend, providing a critical test case for regulatory acceptance and demand.
As the industry matures further, it will be the see-saw between technology innovation and regulatory evolution that will determine the pace of mass adoption. The answer is to create a world where digital assets are not just speculative fads but a core part of our economic and tech fabric. By addressing the challenges of regulation, security, and use, the crypto space can create the trust and size required to reach its full potential and remake the global financial system.
A Framework for Building Scalable Crypto Businesses
For businesses to leap into their crypto adventure, there must be a framework in place to handle the complexity and build the scale capability. The framework must look at four main areas: strategic alignment, technological infrastructure, compliance with regulation, and building talent.
Strategic Alignment
Strategic alignment is where it begins. This involves understanding where crypto fits into the organisation’s overall business strategy. Is the strategy to launch new crypto-native offerings, enhance existing services with blockchain, or open itself up to the asset class as a store of value? For a mainstream financial institution, it might be building a digital asset custody platform or launching a tokenised fund. For a tech company, it might be building a decentralised application (dApp) or introducing a crypto payment gateway. Without a clear and intentional plan, any venture into the world of crypto will necessarily be a fractured and unsustainable effort.
Technological Infrastructure
Second, companies must focus on building a solid technology foundation. This is more about building an integrated system that will be capable of meeting the unique needs of crypto rather than picking up one technology. This includes a secure, scalable custody solution, robust trading and settlement infrastructure, and reliable data analytics capability. Tier-one player engagement is not to be overstated. For instance, a contemporary brokerage may engage with Coinbase Prime to avail itself of its institutional-grade prime brokerage and custody. This “build versus buy” decision is of utmost importance because it has the potential to speed up time-to-market while sidestepping catastrophic technical risk. The infrastructure will also have to be architecturally planned for future interoperability because the fragmented nature of the crypto space means that there must be immediate communication between distinct blockchains and outside data sources.
Regulatory Compliance
Regulatory compliance is the third of the three pillars. Because the regulatory landscape constantly changes and often is unpredictable, organisations must establish a good and proactive compliance programme. That is more than obeying regulations today; it is anticipating tomorrow’s regulations and creating responsive systems to respond to them. That means decent anti-money laundering (AML) and know-your-customer (KYC) practices, as well as decent policies for combating cybersecurity and market manipulation risks. Legal and compliance teams must coordinate very closely with technology and business decision-makers so that new products and services do not merely respect rules but beat them. The objective is to create a reputation of a reliable and consistent player that is required to onboard institutional along retail customers.
Building Talent
Ultimately, a successful organisation in the crypto space is determined by its ability to attract and retain the right talent. The crypto industry is a cross-disciplinary field that requires a peculiar blend of abilities in blockchain programming, cryptography, financial analysis, and regulatory law. Companies must either hire competent talent or upskill current staff on how to understand the intricacies of this new asset class. There must be a culture of continuous learning since the crypto space keeps evolving. An abundance of talent not only facilitates quicker innovation but also provides the in-house ability to handle the technical and regulatory complexities of the marketplace. Without the right people, even the best-conceived technologies and strategies will never succeed.
Realizing the Tokenized Economy
This framework is a blueprint for businesses to venture into the crypto space boldly and with strategy. By tackling these four pillars—strategic alignment, tech spine, regulatory footing, and talent acquisition—businesses can build capabilities to scale their crypto business, build trust, and unlock the actual potential of the tokenised economy. Finance is digital now, and only a considered, phased approach will allow them to thrive in this new world.
