Authors: José Sanchez & Kelvin Koh

Translation: Deep Tide TechFlow

Deep Tide Guide: In February 2026, the way traditional financial institutions entered DeFi underwent a qualitative change: no longer simply strategic cooperation statements but directly purchasing governance tokens and routing products to decentralized infrastructure.

Within five days, Citadel bought ZRO, BlackRock bought UNI and listed BUIDL on UniswapX, and Apollo committed to acquiring 9% of Morpho's token supply over four years. The Spartan Group believes this marks a true turning point for institutionalization of DeFi.

The full text is as follows:

Turning Point for DeFi Institutionalization

In February 2026, within just five days, a number of iconic institutional-crypto partnerships emerged, which we believe signifies a qualitative change in the way traditional finance engages with on-chain infrastructure.

Citadel Securities announced an investment in LayerZero's ZRO token; BlackRock listed its $2.5 billion BUIDL fund on UniswapX and acquired UNI tokens; Apollo Global Management pledged to acquire up to 9% of Morpho's governance token total supply within four years.

Previously, the New York Stock Exchange announced on January 19 the launch of a tokenized securities platform supporting 24/7 on-chain settlements. The model is clear: institutional capital is shifting from exploration to real on-chain execution—purchasing tokens, acquiring governance rights, and routing products to decentralized infrastructure.

This wave of entry differs from previous cycles in three ways.

First, these are direct token purchases that create economic alignment relationships, rather than advisory arrangements or pilot statements.

Second, the related products are actively operated and have real revenue: BUIDL manages $2.5 billion, Morpho supports over $900 million in active loans for Coinbase, and LayerZero has completed $70 billion in USDT0 cross-chain transfer settlements.

Third, the institutions chose open, permissionless protocols over proprietary closed systems, indicating that the composability and network effects of existing DeFi infrastructure are more valuable than the control afforded by custom systems.

The New York Stock Exchange set the stage for this narrative on January 19, announcing plans to establish a blockchain-based venue to support 24/7 trading and instant on-chain settlements for tokenized stocks and ETFs, integrating its Pillar matching engine with blockchain trading post systems. While still awaiting regulatory approval and with relatively limited implementation details, this serves as a high-level directional signal: the world's most iconic stock exchange has designated on-chain settlement as core infrastructure.

LayerZero subsequently announced on February 10 the release of Zero, a new L1 designed for institutional-grade financial infrastructure. Citadel Securities made a strategic ZRO token purchase, which is significant for a company handling about 35% of U.S. retail stock trades.

DTCC will explore expanding its tokenization and collateral management capabilities using Zero; ICE is evaluating the chain for 24/7 trading infrastructure; Google Cloud is joining to explore AI Agent micropayments; ARK Invest simultaneously holds equity and token positions, with Cathie Wood joining the advisory board.

Tether also announced a separate strategic investment in LayerZero Labs on the same day. Zero is expected to launch in the fall of 2026, featuring three zones: a universal EVM environment, a privacy-focused payment zone, and a dedicated trading zone.

The institutional interest reflects a proven throughput capability. USDT0—the fully on-chain stablecoin built on LayerZero's OFT standard—has facilitated over $70 billion in cross-chain transfers since its launch in January 2025.

As shown in the figure below, the daily settlement value has sharply accelerated since the launch of USDT0, transforming LayerZero from a messaging layer into critical financial infrastructure.

Figure: USDT0 has facilitated over $70 billion in cross-chain transfers since its launch

Source: BridgeWTF

The next day, BlackRock's $2.4 billion BUIDL fund (the largest tokenized U.S. Treasury product) was listed and became tradable on UniswapX, marking the first time BlackRock's products have become accessible through decentralized exchange infrastructure.

Securitize handles compliance and whitelisting, while Wintermute, Flowdesk, and Tokka Labs compete for bids through UniswapX's RFQ framework. BlackRock also disclosed a strategic UNI token purchase (specific terms have not been made public), representing its first DeFi governance token on its balance sheet.

Although access to BUIDL remains limited to qualified buyers with a minimum of $5 million, Securitize CEO Carlos Domingo stated that the infrastructure is designed to expand to retail products over time.

The decision to list on Uniswap reflects BUIDL's evolution from a niche experiment to an institutional-scale product. Since launching at a scale of $40 million in March 2024, the fund peaked at nearly $2.9 billion in mid-2025, currently seeing a TVL of approximately $2.5 billion.

Figure: BlackRock's BUIDL fund currently has a TVL of $2.5 billion

Source: Defillama

On February 13, Apollo Global Management signed a cooperation agreement, committing to acquire up to 90 million MORPHO tokens over 48 months, about 9% of the total supply.

In addition to the token acquisition (valued at about $110 million based on mid-February prices), Apollo will also collaborate to build an on-chain lending market, extending its blockchain layout—some of its credit strategies have been tokenized through Securitize (ACRED) and Anemoy (ACRDX).

This deal is one of the most significant collaborations yet between institutions and DeFi native protocols.

The opportunity for institutions in Morpho extends beyond simply holding tokens. The protocol’s architecture allows any entity to become a treasury curator, building lending markets with customized risk parameters. Curators can earn performance fees from generated income and management fees from AUM (capped at 5%), creating a sustainable revenue model for institutional participants.

Perhaps the most compelling validation of infrastructure is the CeFi-DeFi "Mohawk" model pioneered by Coinbase: retail users borrow against BTC and ETH as collateral through the Coinbase interface, while Morpho acts as the lending engine on the backend, currently supporting over $900 million in active loans and $1.7 billion in collateral.

This demonstrates that institutional-grade DeFi can be abstracted and scaled behind a familiar consumer interface, without the user needing to interact with the underlying protocols.

For Apollo, the treasury curation economics, the distribution channels validated by Coinbase, and the governance influence gained through token accumulation together form a strong positioning in the on-chain credit space.

This convergence validates the design choices of permissionless, composable protocols and indicates a sustained demand for governance tokens of infrastructure layer projects.

The main risks still lie in execution: regulatory approvals for the NYSE platform and Zero are pending, institutional token purchases may test protocol governance, and the gap between declarations and ongoing on-chain activity remains significant. Nevertheless, the directional signals are unmistakably clear.

Figure: Morpho treasury curators have generated substantial fee income

Source: Blockworks Research

Looking ahead, we expect these partnerships to deepen further once the CLARITY Act is passed. The bill was approved by the House on July 2025 with a vote of 294 to 134 and is currently advancing in the Senate, where the Banking Committee and Agriculture Committee need to coordinate their respective versions before a full vote.

The main point of contention is the treatment of stablecoin yield: banks are pushing to restrict interest payments on stablecoin balances, while crypto companies argue this would push innovation overseas.

July is widely seen as a critical deadline before the August recess; if missed, the next window will be delayed until fall. Once enacted, the CLARITY Act will provide the first comprehensive regulatory framework for digital assets in the U.S., clarifying SEC/CFTC jurisdiction, establishing a registration path for digital commodity exchanges, and providing legal certainty for tokenized products.

For protocols like Morpho and Uniswap, this would eliminate the current regulatory ambiguity that constrains the scope of institutional partnerships. We believe this will unlock a second wave of broader TradFi-crypto integration.