Demand for Decentralized Finance protocols is rising in the USA as more people seek to escape the clutches of traditional finance.
According to data from CryptoMonday.de, DeFi would rank the 31st bank in America by asset under management despite the recent slump in crypto.
Speaking on the data, CryptoMonday.de CEO, said, “World bank statistics show that more than 1.7bn people lack bank accounts. The existing banking system is not only inefficient but also exclusionary.
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“With DeFi, there is an opportunity to provide financial services to anyone with an internet connection. This is a game-changer for underserved communities around the world.”
Growing institutional enthusiasm for Crypto assets
According to DeFi Llama, the value of locked assets decreased from $244.55bn at the beginning of the year to around $87bn. This indicates that DeFi protocols have lost about $157bn in value since the start of the year. However, this doesn’t seem to have deterred institutions from getting involved in the space.
Despite the gloomy macroeconomic forecast, more institutions are searching for ways to increase their exposure to the fast-developing DeFi sector.
For instance, FIS, a $62bn fintech firm that offers wealth management and payment services, recently partnered with Fireblocks to give its capital market clients full access to DeFi services. Besides, JPMorgan Chase announced it would offer crypto custody services for its clients in February. The move was seen as a significant endorsement of digital assets by a leading financial institution.
Bringing in the next sweep of DeFi users
Despite the hardships DeFi endured recently, the sector is still in a better position compared to where it was at the beginning of the year. There is a growing demand for DeFi protocols in institutions’ lending and borrowing activities.
DeFi would rank much higher on the list of America’s biggest banks by assets under management with the influx of new users. This would help to bring the next wave of users into the industry and spur even more growth.
Meanwhile, clients of conventional banks are requesting more access to DeFi. This is because they are becoming more aware of the benefits that come with using decentralized protocols. However, it remains to be seen how long it would take for these requests to turn into full-fledged adoption.
Fidelity found that 40% of crypto hedge funds and VC firms are interested in digital assets due to the potential for participation in DeFi ecosystems.
According to Fidelity, the high upside of digital assets is the primary reason for their popularity. The firm also found that most institutional investors are already allocating some of their portfolios to digital assets.
With institutional money flowing into the space, it is only a matter of time before DeFi starts to rank among the biggest banks in America by assets under management. This would help bring even more legitimacy to the industry and spur growth.