Author: Yogita Khatri

Translation: 深潮 TechFlow

Deep Tide Guide: For a long time, traditional finance (TradFi) giants' forays into cryptocurrency have largely been limited to equity investments or pilot projects. However, recent actions by giants like BlackRock and Citadel to directly purchase governance tokens like UNI and ZRO have sent strong signals.

This article delves into the deep logic behind this shift: it is not merely asset allocation, but rather a move to secure access rights to the infrastructure of future on-chain finance.

With the clarity of the regulatory environment and the improvement of token tools, DeFi tokens are evolving from "soft governance" to functions similar to "on-chain equity," and a structurally transformative change driven by institutions is taking place.

The full text is as follows:

Traditional financial (TradFi) institutions are no longer just collaborating with the cryptocurrency industry; they are directly purchasing governance tokens.

In just a few days earlier this month, BlackRock, Citadel Securities, and Apollo Global Management successively disclosed plans to purchase DeFi tokens or related acquisitions. BlackRock introduced its tokenized government bond fund BUIDL onto the chain via UniswapX and purchased UNI tokens; Citadel Securities supported the launch of LayerZero's "Zero" blockchain and acquired ZRO tokens; Apollo or its affiliates reached a partnership with Morpho to acquire up to 90 million MORPHO tokens over 48 months, which accounts for about 9% of the total supply.

For years, large financial companies' exposure to cryptocurrency was mostly limited to equity investments, venture rounds, or pilot projects. Direct holdings of tokens were very rare.

So, what has changed? Most investors I interviewed said that rather than a massive bet on DeFi tokens, it is about securing access to infrastructure.

"Every company is buying tokens of specific protocols that they intend to use as infrastructure. This is vendor alignment, not portfolio allocation," said Jake Brukhman, founder, managing partner, and CEO of CoinFund. In other words, the exposure to tokens is linked to the infrastructure these companies plan to use, rather than based on a broad belief that "governance tokens are a new asset class."

Investors indicated that the focus is on distribution and product strategy rather than asset allocation.

TradFi companies are tokenizing their products for distribution on-chain. These products require DeFi venues, and purchasing the protocol tokens they depend on "is largely symbolic, but it does create some consistency and brand halo," said Lex Sokolin, co-founder and managing partner of Generative Ventures. He added, "Unless the purchases are extremely large, this is unlikely to change market dynamics, but that is not the goal of TradFi. They are selling products to us, not buying products from us." He pointed out that TradFi companies are "factories," while cryptocurrency is a "store" for selling tokenized products.

Investors generally believe that DeFi itself has not undergone a fundamental transformation overnight. Instead, the infrastructure has matured and regulatory transparency has improved over the past few years.

"In the past 12 to 24 months, custody and operational infrastructure have improved significantly," stated Lasse Clausen, founding partner of 1kx. "The tools around holding and using tokens, control and governance are better than before, making it more feasible for large compliant institutions to hold tokens directly."

Regarding regulatory transparency, Amir Hajian, a researcher at crypto investment firm Keyrock, mentioned several announcements. The repeal of Staff Accounting Bulletin No. 121 (SAB 121) in early 2025 removed accounting requirements that had previously resulted in high costs for many publicly traded companies in crypto custody. The Securities and Exchange Commission (SEC) ended investigations into companies including Uniswap, Coinbase, and Aave without taking enforcement actions. The "GENIUS Act" created a federal framework for stablecoins. Additionally, the SEC's "Project Crypto" introduced a four-tier token classification system, which Hajian said "signals that most governance tokens do not fall under securities." Meanwhile, several investors noted that the potential passage of the "CLARITY Act" is another regulatory benefit, for which TradFi companies are front-loading their efforts.

Structural Change or Symbolic Gesture?

Most investors believe that these actions by TradFi represent a genuine structural change in institutional participation in cryptocurrency, rather than just purely symbolic bets. Others think the reality lies somewhere in between, while a few still view it as primarily strategic positioning.

"I believe this is structural," stated Richard Galvin, executive chairman and chief investment officer of Digital Asset Capital Management, who has served as an executive at Goldman Sachs and JPMorgan. "Companies of this size do not casually allocate capital. Having worked in traditional finance for 20 years, I understand the internal governance, risk, and compliance thresholds required to approve such investments. These are prudent strategic decisions, not symbolic gestures."

Nonetheless, scale remains important. Some investors noted that based on disclosed information, these allocations are still quite small relative to institutional balance sheets. Anirudh Pai, a partner at Robot Ventures, stated, "It's too early to call it a structural change until governance tokens make up a meaningful portion of assets under management (AUM) or become part of a core strategy; the market may have projected stronger confidence than actually exists."

Governance Tokens vs Equity

Are we entering a "New Meta," where governance tokens begin to play roles more akin to strategic equity?

Most investors stated that it is not yet the case, but the industry seems to be heading in that direction.

Investors pointed out that tokens still do not have legal recourse over protocol assets, do not carry fiduciary responsibility to holders, and are still influenced by regulatory ambiguity. They indicated that for governance tokens to truly serve as strategic equity, a meaningful shift towards shareholder-like rights and clearer value capture mechanisms is needed.

"If governance can truly control cash flow or meaningful economic levers, they can operate like strategic equity," said Boris Revsin, partner and managing director at Tribe Capital. "If token holders can influence fee switches, treasury usage, or protocol direction in ways that affect economics, then the analogy starts to make sense. But in most cases today, the rights remain 'soft.' Legal enforceability is limited, and governance is often more social than contractual. If institutions expect strict enforcement, clearer regulatory treatment may be necessary. Situations like the Aave governance debate illustrate how complicated this can become."

Rob Hadick, a partner at Dragonfly, stated that after the market structure bill passes, he expects to see new types of token designs that resemble "on-chain equity."

Why Hasn't There Been Substantive Price Movement? What Needs to Change?

These TradFi moves are significant, but the price reaction has been lukewarm. Most investors indicated that the tepid response reflects a simple reality: the market was weak at the time of the announcements, risk appetite was low, and Bitcoin was under pressure.

More importantly, token economics have not changed overnight. "Currently, seasoned holders often don't react until the economic benefits are genuinely reflected in the protocol," stated Samantha Bohbot, partner and chief growth officer at RockawayX. Pai concurred, noting that if there is no lasting connection between protocol cash flows and token holders, the response will be muted — and that has indeed been the case.

More broadly, even if protocols exhibit robust revenue and total value locked (TVL), the performance of DeFi tokens remains lagging. Why has this disconnect persisted? "It's a paradox," pointed out Brukhman from CoinFund, noting that most DeFi tokens have historically had little revenue capture capability. "The value flows to liquidity providers (LPs) and development teams, not to token holders, while persistent venture capital (VC) unlock schedules create enduring selling pressure," he remarked. "Institutional money coming in in 2025 is asking for cash flow proof before they allocate, selectively buying (BTC, ETH) rather than widely rotating into DeFi. The fragmentation of L1/L2 further dilutes the value capture of any single protocol."

Several investors noted that clear value capture is key.

"We need to see protocols opening clear 'fee switches' and value capture for their tokens, while issuers also need better disclosures and lower inflation," stated Thomas Klocanas, managing partner at Strobe Ventures. "Regulatory benefits like the 'CLARITY Act' are expected to help attract sustained capital, while institutional inflows further expedite this process by providing liquidity and validation."

Brukhman added that in addition to fee switches, VC unlock schedules need to slow, revenue must scale to support fully diluted valuations (FDV), and the regulatory transparency surrounding the status of tokens must improve so that institutional allocators can hold without compliance risk. "The biggest potential catalyst is the approval of DeFi ETFs: Grayscale AAVE -2.66% and Bitwise." he noted.

Hadick from Dragonfly remarked that regulatory restrictions have so far hindered the establishment of a clear, direct relationship between protocol revenues and token prices. He expects this connection will become clearer with the passage of the market structure bill.

Meanwhile, Pratik Kala, head of research and portfolio manager at Apollo Crypto (not related to Apollo Global Management), expressed that many DeFi tokens still seem "overvalued" from a price-to-earnings (P/E) perspective. Without naming specific projects, he pointed out that some operate similarly to traditional banks but have price-to-earnings ratios as high as 80. "The market will find balance at some point." he stated.

Governance Capture Risks and Potential Pitfalls

The increased institutional participation raises a natural question: will this lead to a concentration of power?

Several investors said this risk is real, while others believe that professional governance participation can increase discipline and long-term direction.

Hajian of Keyrock stated that today’s bigger governance issue is not concentration but "apathy." He noted that voting participation in DAOs is often single digits. He added that institutional participants tend to have much higher voting rates in traditional markets, increasing oversight levels and improving proposal quality.

As for what potential issues these TradFi moves might encounter, regulation remains the biggest risk. Several investors warned that the current regulatory environment depends on government. If policies shift or classify revenue-sharing tokens more aggressively as securities, it could force institutions to retreat or push protocols to become more "permissioned."

"The future SEC chair could reclassify governance tokens with fee switches as securities," remarked Hajian. "The market structure 'CLARITY Act' has not yet passed (though it seems likely)."

"We must get the 'CLARITY Act' implemented!" said Brukhman.

Will More TradFi Companies Follow Suit?

Most investors expect more TradFi companies to purchase DeFi tokens, but will be very selective, focusing on blue-chip protocols.

The prevailing view is that future purchases will also be linked to product strategies rather than speculation. Companies that are building tokenized products or on-chain infrastructure are considered the most likely next movers.

Pai stated that Fidelity Investments, Franklin Templeton, Goldman Sachs, and JPMorgan may position themselves in ways that align with their settlement or liquidity strategies. Hajian pointed out that Goldman Sachs, BNY Mellon, Franklin Templeton, and Cantor Fitzgerald are potential next participants. Klocanas mentioned JPMorgan, Morgan Stanley, Fidelity, Franklin Templeton, Janus Henderson, and Visa as candidates. Brukhman speculated that Fidelity, Franklin Templeton, and State Street are possible actors, while JPMorgan is more likely to build rather than purchase tokens.

Regarding protocols, investors indicated that activity will focus on large protocols with strong liquidity related to stablecoins, tokenized real-world assets (RWA), and trading infrastructure. Given Aave's scale in lending, institutional integration, and evolving value capture mechanisms, both Hajian and Brukhman mentioned it. Other names mentioned include Maple Finance for institutional credit, as well as Sky and Ethena in the stablecoin space (according to Klocanas), while Brukhman pointed to Sky and EtherFi.

While these moves are currently mostly tied to strategic partnerships or work relationships, Hadick stated that he ultimately expects TradFi companies to "invest in DeFi protocols without clear strategic relationships."