JPMorgan Reports Continued Underperformance in DeFi and Tokenization Growth
JPMorgan's Nikolaos Panigirtzoglou reported that decentralized finance (DeFi) and asset tokenization are experiencing slow growth post-2022 crypto winter. Key points include:
- Total Value Locked (TVL) in DeFi remains below 2021 highs, primarily driven by retail users.
- Institutional adoption is limited due to regulatory fragmentation, legal uncertainties, and smart contract security concerns.
- Most institutional crypto activity is centered around bitcoin.
- Tokenization has achieved $25 billion in assets but many initiatives are small and lack liquidity.
- Traditional investors show skepticism towards blockchain transparency, preferring opaque trading venues.
- Despite regulatory efforts like the SEC’s “Project Crypto,” there is uncertainty about whether these changes will address the fundamental lack of demand for blockchain in traditional finance.
- Fintech improvements have reduced the urgency for adopting tokenized alternatives.