Paradigm DeFi Research Report: Over Two-Thirds of Traditional Financial Firms Are Paying Attention to DeFi

Authored by: Paradigm Policy Team

Translated by: TechFlow

We surveyed 300 traditional finance (TradFi) professionals across multiple institutions, roles, and regions.

The results were nearly unanimous: the current financial system hinders economic growth and leads to resource waste due to its inefficiencies. The problem is urgent, and the cost of inaction is even higher. Many see decentralized finance (DeFi) as the solution—a way to eliminate redundancy and unlock real value.

Our research report makes one thing clear: DeFi is not just an alternative option; it is the future direction of traditional finance. However, this transformation requires policies that support its development.

Click here to access the full report.

Finding 1: Over Two-Thirds of Traditional Financial Firms Are Paying Attention to DeFi

The current technological infrastructure and systems used in traditional finance are labor-intensive and require extensive manual processes. As a result, many TradFi firms are exploring emerging technologies to cut costs, improve risk management, and enhance operational efficiency. Cryptographic technology is increasingly becoming part of their strategy:

TradFi firms see DeFi as a key solution to operational inefficiencies.

Nearly 90% of firms are investing in or researching how to leverage public blockchain technology.

Traditional financial institutions are actively embracing self-disruption, recognizing the enormous benefits of transitioning to DeFi-powered infrastructure.

Finding 2: DeFi Will Become a Core Component of Traditional Finance

The data is clear—TradFi believes DeFi will ultimately play a crucial role in their core products and business lines. This perspective stems from the belief that DeFi can significantly enhance the financial system.

From initial skepticism to growing acceptance, TradFi no longer views DeFi as something confined to the crypto industry. Instead, they see it as an inevitable trend and a major opportunity.

Finding 3: Traditional Finance Rejects Private Blockchains as a Substitute for Public, Permissionless Blockchains

Last year, our research showed that central banks were shifting away from proprietary blockchains in favor of open-source software and public networks. This survey further confirms that most of the TradFi community believes public, permissionless blockchains are essential for the development of smart contracts and asset tokenization.

As a result, it is critical to protect these systems and establish strong incentives for the development and maintenance of open public infrastructure.

Finding 4: Stablecoins, Asset Tokenization, and Decentralized Exchanges (DEXs) Are Top Priorities for TradFi

Stablecoins, asset tokenization, and decentralized exchanges are the three areas TradFi is currently most interested in, aligning with the increasing on-chain transaction volumes in these sectors.

These three pillars are essential for accelerating market growth, as they each provide:

Settlement assets (stablecoins)

A universal representation of assets (asset tokenization)

Composable protocols for on-chain financial transactions (DEXs)

Over the next few years, we expect these areas to see continued expansion.

Finding 5: Regulatory Barriers Are the Biggest Obstacle to DeFi Unlocking Economic Efficiency in the Short Term—Policymakers Face a Generational Opportunity to Drive Change

Traditional finance (TradFi) has come to terms with the fact that decentralized finance (DeFi) is inevitable and represents a significant improvement over many existing financial systems. In this regard, TradFi and the crypto industry share a common perspective—the latter has long been advocating for the preservation of DeFi’s open ecosystem to ensure it can fully mature before being stifled by regulation.

However, the primary obstacle preventing traditional finance from fully embracing crypto is not a lack of infrastructure or utility—it is the restrictions imposed by banks and financial regulators. These regulatory bodies have kept TradFi firms, banks, exchanges, and funds from entering the DeFi space, slowing down the integration process.

Now, the era of cautious observation is over.

It has been four years since the "DeFi Summer," and we have witnessed a series of global financial events and crypto market turbulence that have proven DeFi's anti-fragility. The time has come for regulators to remove the barriers between TradFi and DeFi and allow traditional financial institutions to embrace this revolutionary technology.

This article is sourced from Foresight News:

https://foresightnews.pro/article/detail/80916

Respectfully submitted by the AIC Team

March31, 2025