In 2025, the digital asset landscape underwent a profound transition. After years of hesitation, institutional investors—once cautious observers of the cryptocurrency sector—have now stepped decisively into the market. This shift, driven by improved infrastructure, clearer regulatory pathways, and a stronger focus on real-world financial integration, is redefining how capital flows into crypto.
Aishwary Gupta, Global Head of Payments and Real-World Assets at Polygon Labs, spoke with BeInCrypto to outline the forces behind this transformation. His insights reveal why institutional inflows now dominate the market and how this evolution may shape the future of blockchain finance.
Institutional Capital Now Represents the Majority of Crypto Inflows
According to Gupta, institutions currently contribute an estimated 95 percent of all inflows into the crypto ecosystem. Retail participation—once the primary engine behind speculative market cycles—has diminished to approximately 5–6 percent. This shift indicates a maturing environment where structured finance, regulated products, and long-term strategies take precedence over hype-driven trading.
Major investment firms such as BlackRock, Apollo, and Hamilton Lane have begun integrating digital assets into their portfolios, typically allocating between 1–2 percent and launching ETFs or on-chain tokenized products. These entrants are not motivated by trend-chasing; rather, they are responding to the robustness of today’s blockchain infrastructure.
Gupta explains that the real catalyst has been the development of institutional-grade rails, particularly those enabled by Ethereum-compatible networks. Polygon’s collaborations with JPMorgan for a live DeFi trade under the Monetary Authority of Singapore, Ondo’s tokenized treasuries, and AMINA Bank’s regulated staking initiatives demonstrate that public blockchains can now meet regulatory and audit standards while supporting scalable, low-cost transactions.
“Institutions no longer need experimental sandboxes,” Gupta noted. “They can interact directly with well-tested, public networks that satisfy compliance and operational requirements.”
Why Institutions Are Entering: Yield, Diversification, and Efficiency
Gupta identified two main drivers behind the institutional surge.
The first is the hunt for yield and portfolio diversification. Tokenized treasuries, regulated staking products, and yield-bearing stable instruments offer familiar value propositions with the added benefits of digital settlement.
The second is operational efficiency. Blockchain delivers measurable improvements in settlement speed, liquidity sharing, and asset programmability. This is pushing traditional financial institutions and fintech networks to pilot tokenized fund structures, explore on-chain transfers, and streamline asset servicing workflows.
Retail Retreat Raises Concerns—But Gupta Sees a Path Back
While institutions are gaining traction, the departure of many retail investors has raised questions about crypto’s identity. Gupta attributes the retail decline to losses from speculative meme coin cycles and unrealistic expectations during volatile market phases.
However, he does not consider this exit permanent. He believes structured, regulated, and transparent financial products will restore confidence among retail participants over time.
Does Institutional Dominance Threaten Decentralization?
A recurring concern in the blockchain community is whether institutional dominance undermines crypto’s decentralized ethos. Gupta argues that this outcome is unlikely as long as public, open networks remain the foundational infrastructure.
“Decentralization is threatened when networks close themselves off, not when new participants arrive,” he explained. He sees institutional participation not as centralization, but as a merging of infrastructures—where the same chains that host DeFi, NFTs, and gaming can also support ETFs, treasuries, and institutional staking.
Will Compliance Slow Innovation? Gupta Says It May Strengthen It
When asked whether increased compliance could inhibit creativity, Gupta acknowledged the tension but emphasized long-term benefits. The early “move fast and break things” mentality fueled innovation but also produced notable failures and regulatory backlash. Institutional involvement, he argues, encourages developers to embed compliance into innovation from the outset, resulting in more resilient and scalable solutions.
The Road Ahead: A More Stable, Yield-Oriented Crypto Market
Gupta believes the future of crypto will not be defined by Wall Street taking over, but rather by convergence. Institutional-grade capital is slower, more risk-managed, and less emotional. As this capital takes a leading role, market volatility is expected to decline, with financial infrastructure becoming the dominant narrative over speculative trading.
He anticipates rapid growth in real-world asset tokenization, deeper integration of regulatory frameworks, and increased institutional staking activity. Interoperability will also become a critical priority as institutions scale their operations across multiple networks and rollups.
Crypto, he concludes, is evolving from an alternative asset class into a core component of global financial infrastructure.
