Institutional Investors Embrace Digital Assets as Infrastructure and Trust Deepen
Fidelity, Franklin Templeton, and others say regulation, custody, and derivatives are unlocking serious institutional interest in crypto
Institutional adoption of digital assets is no longer speculative fantasy—it’s a measured response to improving infrastructure, greater regulatory engagement, and real-world utility. That was the prevailing view from leaders at Fidelity Investments, Franklin Templeton, LSEG, and GFO-X, who said traditional finance is gradually—but purposefully—making its way into the digital asset space.
At the heart of this movement is infrastructure: custody, clearing, and derivatives are not just enabling participation, they’re laying the rails for future financial systems.
Cynthia Lo Bessette, Head of Fidelity Digital Asset Management, put it plainly: “Fidelity's overall engagement in this space really began over a decade ago and started with the early exploration and research into Bitcoin and the Bitcoin network, and what really prompted that interest and that research was a... curiosity about what a neutral payments network might mean for financial services.”
That early research eventually expanded into Ethereum and beyond. “From an institutional standpoint,” she continued, “how are institutions going to be able to hold, buy, sell, and trade this asset, meaning fundamental infrastructure such as custody, and that's where Fidelity launched its custody business several years back.”
Roger Bayston, Head of Digital Assets at Franklin Templeton, echoed the emphasis on infrastructure.
“Franklin Templeton's journey really was about how we can use blockchain inside of our business,” he said. “Capital markets are full of ledgers. In fact, a mutual fund is two ledgers—a ledger of the shareholders and then the ledger of the assets themselves.”
Bayston explained that this insight led them to develop “Benji,” a tokenized money market fund.
“By and large, what we learned was there were large efficiency gains,” he said. “That was our aha moment. Our aha moment was, hey, we're in an information-based business... these are better rails to do that for the long term.”
Derivatives and the Credit Gap
Arnab Sen, CEO of GFO-X, was clear on what needs to happen next: fix credit. “The derivatives market is multiple times the size of the spot market,” he said. “So derivatives typically drive a lot of the underlying flow. It drives the need for collateral. It drives the need for payments.”
He emphasized that a lack of trust and intermediation severely constrains crypto markets today.
“The irony of blockchain and digital assets—it was supposed to solve for trust, and quite frankly, there's no trust in this market at all. Everything is pre-funded, and no one trusts anyone until you actually give me the asset, which is not how traditional markets work.”
To solve that, GFO-X is building for the banks. “You have to solve for the banks. You have to solve for the trust, and then you solve for the derivatives where the use case comes in,” Sen said. “If you think about a typical massive institutional asset allocator, they will enter a market usually via a structured product… whether that's yield enhancement… or a capital-protected product.”
According to Sen, real institutional volume will only flow when such familiar products—issued by trusted counterparties—exist.
Clearing Houses and Market Confidence
Marcus Robinson, Head of CDSClear & Head of DigitalAssetClear at the London Stock Exchange Group (LSEG), highlighted how clearing infrastructure could unlock institutional demand.
“We provide and bring confidence to the end user in the underlying asset classes by providing risk mitigation that would persist in the bilateral space,” he said. “We’ve created… a separate segregated service called DigitalAssetClear, which is really focused on the central clearing of crypto derivatives.”
Robinson stressed that traditional players aren’t interested in building entirely new infrastructure from scratch. “We're leveraging a lot of the existing infrastructure that we would already have for other asset classes… The pipes and the plumbing are really there.”
He also emphasized the regulatory angle. “If you look at what regulation provides—confidence to the end users in the infrastructure that supports it,” he said. “It really has the potential to grow this market… we've seen OTC (over the counter) markets grow two, three, four times in the space of the last 10 years… purely because of the implementation of greater standardization.”
Caution Around Stablecoins and the Road Ahead
While enthusiasm is rising, Bayston noted unresolved risks, especially in stablecoins.
“We kind of moved way away from, are we going to be paying for lattes at Starbucks with Bitcoin?” he said. “But those are still part of the challenges. I think we're still gonna have hiccups ahead.”
He warned that “we’re still going to see a hiccup probably in the stable coin marketplace sometime in the next several years. This market has not experienced a credit cycle by and large.”
Despite this, Bayston remains optimistic: “There's roughly $3 trillion in crypto… It's bigger than the high-yield bond market over 40 years. It's a significant capital market.”
Lo Bessette, too, sees signs of growing seriousness.
“With that passage of time… we've had more conversations with investors who want to learn more,” she said. “Education has been really important… these assets represent the value of the network, which is driven by the amount of activity and the different applications that are made available.”
She added that institutional adoption will come not from retail demands but from service providers: “It's really underlying the service providers that are using and benefiting from this infrastructure to deliver better, more efficient, and lower-cost services.”
Next Phase: Structured Access and Yield
All panelists agreed that the next evolution would come through packaged financial instruments that combine digital infrastructure with familiar investment products.
As Sen put it, “Infrastructure takes time. Large institutions take time… we've got to show where there's the uplift in value, the money, and the revenue that will drive all of this build.”
Bayston concluded that institutions will come not just for returns, but for strategic diversification: “Even a 3% allocation would seem to be a passive anchor that clients, large and small, might include in their portfolio.”