A16z released a report this week examining how traditional finance is actually using blockchain technology. The verdict: institutions want the efficiency, not the ethos. They're adopting elements of DeFi that lower costs, speed up settlement, and tighten customer relationships — but they're leaving behind open access, pseudonymity, and trustless execution.
What institutions are building
The report points to real-world examples. JPMorgan runs a permissioned blockchain for institutional deposits. BlackRock and Franklin Templeton have launched tokenized money market funds. These aren't permissionless systems. They're private networks that use blockchain to cut operating costs and accelerate settlement, while keeping control in the hands of the issuer.
That's the pattern a16z identifies: TradFi cherry-picks the features that fit its regulatory, operational, and risk requirements. Everything else — the open, borderless nature of DeFi — gets left out.
The permissionless roots
Here's the irony, according to the report. The very capabilities institutions are now using were first developed in open, permissionless crypto ecosystems. Tokenization, programmable money, atomic settlement — all came from DeFi. Wall Street is essentially taking the technology without the philosophy.
A16z doesn't frame this as a betrayal. It's a pragmatic observation. The venture firm notes that the blockchain infrastructure built for public, trustless use turned out to be useful for private, permissioned applications too.
Not just Wall Street
The report also carries a warning for the crypto industry: don't focus solely on Wall Street. a16z argues that opportunities exist beyond traditional finance — in areas where permissionless systems can still offer unique value. The firm suggests that builders shouldn't abandon the original vision of open access just because institutions are coming in.
The report doesn't name specific alternative use cases, but the message is clear. The crypto industry should keep building for both audiences, not just the one with the deepest pockets.
The full report is available on a16z's website.
