2020 – Early Exploration
Financial institutions began cautiously exploring the crypto space. In mid-2020, the U.S. Office of the Comptroller of the Currency (OCC) allowed banks to offer crypto custody services, paving the way for players like BNY Mellon (which launched its digital asset custody offering in 2021). Companies like MicroStrategy and Square began allocating Bitcoin to their reserves, while PayPal introduced crypto buying and selling features to U.S. users in Q4—signaling growing institutional acceptance of crypto as a legitimate asset class.
2021 – Rapid Expansion
Driven by the bull market, institutional adoption accelerated. Tesla purchased $1.5 billion in Bitcoin, and Coinbase went public on Nasdaq, symbolizing a bridge between Wall Street and crypto. Morgan Stanley and JPMorgan offered crypto investment products, and ProShares launched the first U.S. Bitcoin futures ETF. Fidelity and BlackRock created dedicated crypto units. Visa and Mastercard began experimenting with stablecoin settlements (e.g., Visa piloting USDC).
2022 – Infrastructure Amid Bear Market
Despite market turmoil (e.g., Terra and FTX collapses), institutions focused on building. BlackRock partnered with Coinbase to launch crypto trading for institutional clients and created a private Bitcoin trust. BNY Mellon and Nasdaq enhanced custody services. JPMorgan’s Onyx division used JPM Coin to settle hundreds of billions in wholesale payments. Tokenization pilots expanded, including public-chain DeFi simulations under Project Guardian. However, regulatory uncertainty led some firms to delay new products pending clearer rules.
2023 – Institutional Momentum Rebuilds
By early 2023, institutional interest rebounded. BlackRock filed for a spot Bitcoin ETF, followed by Fidelity and Invesco. EDX Markets, backed by Charles Schwab, Fidelity, and Citadel, launched as a compliant crypto exchange. Tokenization of traditional assets surged, with KKR tokenizing a fund on Avalanche and Franklin Templeton moving a treasury-backed money market fund to public blockchain. Regulators responded: the EU passed MiCA, and Hong Kong reopened crypto trading. The U.S. approved Ethereum futures ETFs, sparking anticipation for spot ETF approval.
Early 2024 – Spot ETFs Approved
In January 2024, the SEC approved the first spot Bitcoin ETFs (later followed by Ethereum), ending years of delays and enabling wider adoption among pensions, RIAs, and conservative portfolios. Inflows surged within weeks. PayPal launched PYUSD, Deutsche Bank and Standard Chartered invested in crypto custody startups. By Q1 2025, nearly all major U.S. banks, brokerages, and asset managers offered crypto-related products or formed strategic alliances in the space.
TradFi’s View on DeFi: 2023–2025
From 2023 to 2025, traditional financial institutions transitioned from skepticism to cautious exploration of DeFi. Despite 2022’s market volatility, DeFi protocols remained operational, showcasing automation and transparency. As a result, many institutions began experimenting with "permissioned DeFi" environments.
For example, JPMorgan’s Onyx network uses JPM Coin for institutional stablecoin settlements. Aave Arc introduced KYC layers to let qualified institutions access decentralized liquidity pools. This approach—embracing technology while retaining control—defined TradFi’s main strategy toward DeFi heading into 2025.