Decentralized finance has long promised open financial markets that everyone can access without intermediaries. Despite the rapid growth of crypto infrastructure, major financial institutions have remained cautious.
According to Henry Zhang, founder and CEO of DigiFT, the barrier is not the technology itself. It’s trust.
In an interview with TheStreet Roundtable, Zhang explained how institutions evaluate DeFi.
What does ‘institutional rank’ mean?
“Institutional level sounds like one sentence, but it actually means many things,” Zhang said. “It includes the quality of the underlying assets, the legal structure, governance, risk management and disclosure.”
These requirements are well known to the traditional financial world, but are still developing in many crypto markets. Institutions need clear legal definitions of what a token represents, how it is linked to underlying assets, and who is responsible if something goes wrong.
Zhang argued that without these safeguards, large capital pools simply will not participate.
“If it is not at an institutional level, there will be no trust,” he said. “And without trust there will be no serious money and no serious business.”
The institutional trust layer
The idea of building “trust” in crypto may sound contradictory to early blockchain ideals. Bitcoin and many early crypto projects emphasized trustworthy systems, with users relying on code rather than settings.
Zhang believes the two ideas are not really in conflict.
“When we say trustless, we’re talking about the technology,” he said. “Blockchain makes it possible for two people who don’t know each other to transact because the rules are immutable and verifiable.”
Institutional investors are focused on a different kind of trust.
“If I receive a token representing a U.S. Treasury, I have to trust that there is a real connection between that token and the underlying asset,” Zhang said. “No one else should touch that property, and the property clearly needs to be protected.”
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That trust does not purely arise from the blockchain infrastructure. It stems from governance frameworks, legal agreements and custody structures that ensure tokenized assets correspond to real-world ownership.
For Zhang, the future of DeFi will likely combine both approaches. Blockchain technology can provide transparency and automation, while institutional frameworks provide the legal certainty needed for large-scale capital.
As tokenized securities and real-world assets continue to develop, the next phase of crypto will rely less on technological innovation and more on building the structures that the traditional financial world already expects.