Author's Viewpoint: Kevin Rusher, Founder of RAAC
Cryptocurrency is a movement born from a rejection of traditional financial culture, driven by the belief that transparency, decentralization, and code can create a better financial system than the one that led to the 2008 financial crisis. For many, the creation of Bitcoin was a rebellion against traditional financial gatekeepers who extract all value from the market.
This foundational spirit remains important for cryptocurrency, but the landscape has changed dramatically after 15 years. Today, BlackRock is the second-largest holder of Bitcoin (BTC), second only to its creator, Satoshi Nakamoto. Meanwhile, almost every major traditional asset management company has shown some interest in the industry through BTC, Ethereum (ETH), and real-world assets (RWA) such as tokenized private credit and government bonds.
However, the exception is the decentralized finance (DeFi) space. While DeFi aims to promote universal financial freedom, the extreme speculative culture, meme coins, and unsustainable hype cycles mean that DeFi still resembles a casino in the eyes of most outsiders.
In this new crypto environment, it is time for DeFi to change its image, and a significant part of this mission lies in acknowledging that the institutions it was originally designed to counter are, in fact, an important component of its growth journey.
Institutional investors have been slowly entering the crypto space for years. The launch of BlackRock's spot Bitcoin exchange-traded fund (ETF) feels like a turning point. Now managing assets of $70 billion, making it the fastest-growing ETF in history, BlackRock's bet has paid off.
Nevertheless, cryptocurrency still lacks trust. According to the latest data, 38% of non-crypto holders say they will never invest in this asset class due to its volatility and lack of access channels. In the U.S., cryptocurrency adoption remains below 2022 levels at 28%, down from 33% in 2022, the year when the Terra collapse wiped out $60 billion in market value overnight.
As a result, 63% of Americans do not trust current crypto investment products.
This lack of trust in cryptocurrency is a serious issue. It is especially pronounced in DeFi, where trust levels may be the lowest, not only due to the events of 2022 but also because of the frequent occurrences of meme coin scams and hacking attacks. This trust issue must be addressed, requiring stability, structure, and liquidity.
This is where Wall Street and its new crypto advocates—referred to as "suitcoin investors"—can bring real value to DeFi. While many crypto natives strongly oppose the entry of these institutional investors and government-related participants into the crypto space, they are beginning to build meaningful on-chain capital.
Nowhere is this more evident than in the tokenization of real-world assets (RWA), which has just surpassed a market cap of $24 billion, up from $11.5 billion in June 2024, and has shown an upward trend during periods of geopolitical instability that have caused other markets to decline.
Incredibly, private credit—a relatively dull, elitist traditional finance (TradFi) asset class—leads all on-chain RWAs with a 58% market share, followed by tokenized U.S. government bonds at 34%. This growth shows no signs of slowing, with VanEck predicting that RWA will exceed $50 billion by the end of 2025.
Tokenized RWA is a massive gateway for Wall Street into decentralized finance. Traditional assets bring familiarity, lower volatility, and stronger collateral design, facilitating a transition for cautious investors from TradFi to DeFi.
Importantly, this surge is not driven by hype, influencers, or meme coin mania. Suitcoin investors are testing the waters of crypto and DeFi to leverage its open infrastructure, increased liquidity, and trading convenience. This flow of capital is precisely what DeFi needs to thrive.
DeFi has finally met the standards that institutions require and expect. The space offers a cleaner user experience, a compliance-ready framework, and stable, programmable returns that often exceed traditional financial benchmarks.
A recent report from Artemis and Vaults confirms this shift. While most investors are merely looking at price charts, DeFi is quietly becoming the financial backend for institutional participants. The report identifies "invisible DeFi" as an emerging trend: protocols like Morpho, Spark, and Aave are embedding yields directly into fintech applications, exchanges, and wallets, eliminating the complexity of DeFi for end users. With the help of these seamless integrations, mortgage platforms alone surpassed $50 billion in total locked value (TVL) by June 2025.
Another example is Coinbase's lending business. Through this initiative, Coinbase has issued over $300 million in BTC-backed loans, all conducted on-chain, with most non-native users even unaware of the blockchain involvement.
DeFi is now ready for institutions. When combined with clearer regulations and genuine policy shifts, the bridge between TradFi and DeFi looks more like an opportunity to be leveraged rather than a threat to DeFi's existence.
However, this does not mean that suitcoin investors can dictate the terms. If institutions adopt blockchain technology through centralized and permissioned systems, it would merely be TradFi in a new guise.
The next step—and the most crucial one—is to ensure that DeFi can coexist on equal terms with suitcoin investors, maintaining the authenticity of its foundational decentralized principles while remaining open to collaboration and development.
If embracing institutional participation makes the DeFi ecosystem inevitably appear more serious, the instances of overnight wealth will decrease, and more compliance requirements will need to be adhered to. But this is the only way to build a system that won't collapse due to a viral tweet. If embracing suitcoin investors can guarantee a prosperous future for DeFi, then it is absolutely worth it.
Author's Viewpoint: Kevin Rusher, Founder of RAAC
Related: How to Use GitHub, Discord, and X to Discover Hidden Crypto Gems Early
This article is for general informational purposes only and is not intended as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Original: “Decentralized Finance (DeFi) Shouldn’t Fear ‘Suitcoin Investors’”
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