Financial Institutions Are Catching Up to Crypto

The first Bitcoin block was mined on Jan. 3, 2009, launching a grassroots movement of digital currency enthusiasts. Since then, the crypto markets have been dominated by retail traders—individual investors, including many early adopters—who have helped shape an initial perception that crypto is a fringe movement.

“Crypto is probably the first time where an asset class was actually originated and pushed from the community,” says Catherine Chen, Head of VIP and Institutional at Binance, the world’s largest cryptocurrency exchange. “Whereas, traditional asset classes were first institutionalized and then made available to retail.” 

For years, crypto’s unconventional roots have resulted in a volatile market that’s been difficult for traditional finance (TradFi) to penetrate—and the industry has lacked infrastructure for mainstream financial institutions.

But things are starting to shift: Binance and other major crypto exchanges saw surges in registered institutional users in 2024, signaling wider adoption of a once-peripheral financial product, driven by increasing regulatory clarity in key markets and rising global adoption.

With institutions signing up, crypto is shedding its reputation as a financial interloper. Chen sees TradFi adoption as a long process that requires regulatory clarity, with two asset classes—crypto and traditional investments—eventually converging into one. Although it’s a slow-moving integration, Chen has observed a recent uptick in interest from institutional investors.

Some entities are moving faster than others. Proprietary trading firms, which trade using their own money rather than client funds, and family offices are more nimble and often eager to capitalize on emerging opportunities in the digital-asset space. But Binance is seeing crypto adoption from all kinds of traditional institutions, from private hedge funds to public pension funds, driven by two main motivators: impressive return profiles and portfolio diversification.

Investors are looking for a hedge against inflation, Chen explains.

“Investors can make certain allocations into an asset class that is decentralized, with its maximum minted limit already written and unchangeable,” she says.

In other words, investors see crypto as an asset they can put money into that tends to maintain or increase in value as prices rise.

The arrival of TradFi institutions also comes with TradFi expectations—sophisticated tools, reliable infrastructure and white-glove service—and the crypto industry is evolving to fit their needs.

For an industry once defined by a grassroots ethos, the shifting landscape might come as a surprise. But it’s also a sign of crypto’s growing maturity—and its future as a legitimate pillar of global finance.

As traditional financial players venture further into the crypto arena, exchanges must adapt, becoming more than just large trading venues for individuals. 

Beyond offering 24/7 service and liquidity expected by sophisticated traders, Binance has already rolled out TradFi-inspired infrastructure and experiences—from a triparty solution with banking partners that safeguards collateral, to a suite designed to help wealth managers support their high-net-worth clients’ entry into crypto.

“We’re not reinventing the wheel—we already have a playbook from TradFi,” Chen says. “We need to zoom in on real pain points and improve upon them.”