How Wall Street Is Quietly Entering DeFi

For years, decentralized finance (DeFi) was seen as a playground for crypto natives. Complex protocols, self-custody risks, and regulatory uncertainty kept traditional finance on the sidelines. But that picture is changing. Some of the world’s largest banks and asset managers are now testing—and in some cases, directly using—DeFi systems.

From JPMorgan’s first on-chain trades to BlackRock’s tokenized funds finding their way into DeFi lending pools, the walls between traditional finance (TradFi) and DeFi are starting to blur. Here’s a closer look at who’s moving in, how they’re accessing DeFi, and which infrastructure providers are making it possible.

Big Finance Experiments in DeFi

JPMorgan

In 2022, JPMorgan became the first major bank to execute a DeFi trade on a public blockchain. Working with the Monetary Authority of Singapore, its Onyx division used a modified version of Aave to trade tokenized yen and Singapore dollar deposits. The pilot proved that wholesale markets could settle cross-currency trades via smart contracts—if compliance guardrails like KYC credentials are built in.

BlackRock

The world’s largest asset manager took its money market fund on-chain in 2025. Through a partnership with Securitize, BlackRock launched the BUIDL fund and created a token, sBUIDL, backed by short-term Treasuries. That token is now integrated with Euler Finance on Avalanche, letting holders borrow stablecoins while still earning Treasury yields. This is BlackRock’s first real DeFi use case, bridging billions in traditional assets with open protocols.

Franklin Templeton

Franklin Templeton was early, launching the Benji money market fund on blockchain back in 2021. Today, its tokenized fund shares exist across Stellar, Ethereum, Arbitrum, Solana, and more, roughly $700M already lives on-chain. Franklin’s goal is to make traditional fund products compatible with DeFi, offering continuous yield and instant transfers, all while staying fully compliant.

HSBC

HSBC has chosen a more conservative path. In Hong Kong it launched a tokenized deposit network for corporate payments—24/7 settlement of HKD and USD deposits using blockchain. While not open DeFi, it mirrors many of the same features: programmable money, real-time transfers, and automated compliance. HSBC’s clients never touch a DeFi wallet, but the underlying technology is converging.

Société Générale

Through its digital arm SG-Forge, Société Générale became the first bank to borrow from a DeFi protocol. In 2022, it posted tokenized covered bonds as collateral on MakerDAO and withdrew 7 million DAI. This was a fully structured deal, approved via decentralized governance, and it demonstrated that even regulated banks can tap decentralized liquidity under the right framework.

How Institutions Access DeFi: Direct vs. Indirect

Not all institutions engage the same way.

• Direct access: JPMorgan and SocGen interacted with DeFi protocols themselves, using tokenized assets and smart contracts under regulatory supervision.

• Indirect access: BlackRock and Franklin Templeton tokenize funds through intermediaries like Securitize, which then integrate into DeFi protocols. HSBC builds closed versions of DeFi in-house for clients.

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The pattern is clear: institutions either use DeFi with strict permissioning or rely on intermediaries to bridge compliance gaps. Very few are “aping in” the way retail users do.

The Institutional DeFi Infrastructure

This shift wouldn’t be possible without a growing ecosystem of service providers.

• Aave Arc – Permissioned pools where all participants are KYC-verified. Built for banks and funds that want DeFi lending without anonymous counterparties.

• Maple Finance – On-chain institutional lending, using pool delegates who perform credit checks. Offers undercollateralized loans and real-world credit exposure.

• Centrifuge & Aave Horizon – Platforms for tokenizing real-world assets like Treasuries and loans, bringing them into DeFi with compliance layers.

• Fireblocks – A custody and wallet platform that secures keys with MPC technology. First whitelisting agent for Aave Arc; trusted by BNY Mellon and others.

• MetaMask Institutional – Enterprise version of the popular wallet, integrated with custodians and offering compliance checks so trading desks can safely access DeFi.

• Anchorage Digital – A federally chartered U.S. crypto bank. Offers custody plus direct DeFi access (like Uniswap) inside its secure portal.

• Copper – A custodian with its ClearLoop system, letting institutions keep assets in custody while trading on exchanges or approved DeFi pools. Backed by Barclays.

Together, these providers are solving the three biggest barriers for institutional adoption: custody, compliance, and risk management.

What It Means

Institutional DeFi isn’t about chasing 1000% APYs. It’s about using blockchain infrastructure to make traditional finance more efficient, transparent, and global. The pilots and products we’re seeing today, tokenized funds, permissioned lending pools, tokenized deposits—are small in size but big in significance.

Once regulation and trust frameworks mature, the same banks and asset managers experimenting now could deploy trillions of dollars through DeFi rails. The future may not be “DeFi vs. TradFi” but a blended system where the largest financial institutions are users of decentralized finance, under their own terms.

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