ARK Invest has challenged a16z crypto’s view that traditional financial institutions will mainly adopt controlled blockchain systems rather than decentralized finance.
Summary
- ARK argues public blockchains will win institutional adoption as tokenized assets increasingly connect with DeFi.
- A16z expects banks to adopt blockchain primitives while keeping compliance, governance and operational control centralized.
- Standard Chartered forecasts mature DeFi protocols could capture much of the future tokenized asset activity.
ARK director of research Lorenzo Valente called the argument “overly bearish and simplistic” in a response on X. He argued that public blockchains have already gained more traction than earlier private blockchain projects and that institutional finance will increasingly depend on infrastructure created by crypto-native companies.
A16z sees institutions choosing control over open access
The debate began after a16z crypto published an essay titled “TradFi doesn’t want DeFi. It wants blockchains.” The firm argued that banks and asset managers will adopt blockchain features when they reduce costs, improve settlement or expand distribution without giving up control.
Under that model, institutions may use tokenization, programmable money and atomic settlement while limiting open access and pseudonymous participation. A16z described the emerging system as “programmable financial infrastructure” built around regulatory, risk and governance requirements rather than today’s fully permissionless DeFi model.
The firm did not argue that open networks will disappear. Its thesis says institutional blockchain systems and crypto-native DeFi can develop in parallel, with open networks continuing to create technology that regulated firms later adopt.
ARK argues public networks have already proved their value
Valente’s counterargument centers on adoption already taking place on public blockchains. Tokenized funds, stablecoins and other financial assets increasingly operate on networks such as Ethereum rather than isolated private systems.
As previously reported, tokenized real-world assets had crossed $29 billion by April 2026. Tokenized US Treasury products alone reached about $13.4 billion, while more than 40 major financial institutions had launched or developed products using public blockchain infrastructure.
That growth supports part of ARK’s case, although institutional projects are not purely permissionless. Products can use public networks while placing restrictions on investors, wallets, custody and transfers. This allows firms to use shared blockchain infrastructure without adopting every feature associated with open DeFi.
DeFi protocols are gaining institutional connections
Recent institutional activity also shows that the dividing line between DeFi and traditional finance is becoming less clear. Standard Chartered has forecast that $4 trillion in stablecoins and tokenized assets could move onchain by the end of 2028, with established DeFi protocols handling much of that activity.
As reported by crypto.news, the bank identified Aave, Compound and Morpho as potential beneficiaries as institutions move more assets onto blockchain networks. BlackRock’s BUIDL fund has also gained DeFi utility by serving as collateral and connecting with onchain markets.
Other blockchain ecosystems are adding controls directly to decentralized infrastructure.However, XRP Ledger developers have been working on permissioned trading and lending features designed for regulated institutions while maintaining onchain settlement.
Permissioned networks remain a competing model
Traditional finance is also putting capital into systems designed specifically around institutional privacy and control. Canton Network has attracted banks and market infrastructure companies by offering permissioned access and privacy-focused settlement tools.
A crypto.news analysis previously examined the growing competition between Canton’s institution-focused model and Ethereum’s open infrastructure. The two approaches show that financial firms are testing both controlled systems and public blockchain rails rather than following one clear model.
The dispute between ARK and a16z therefore centers less on whether traditional finance will use blockchain and more on which infrastructure will carry the activity. A16z expects institutions to reshape blockchain technology around existing controls. ARK argues that public networks and DeFi protocols have already built liquidity and infrastructure that financial firms will find increasingly difficult to avoid.
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