Reversing the Flow: Why Crypto Should Swim In the TradFi Ocean

This article is part of The Assetizer, GenTwo's thought leadership platform.

On Tuesday I had Mark Arasaratnam from GenTwo Digital on the podcast to discuss our offering and how GenTwo has built a bridge between institutional tradfi and crypto.

This bridge-building is a big topic right now. But when most people talk about it, they tend to focus on getting investors access to crypto. The reverse flow - how crypto projects might access institutional liquidity - seems far less discussed. Yet there could be great potential here.

So I and my AI decided to look into this, and here's what we found.

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The Story the Numbers Tell

The research reveals a staggering gap: DeFi's total value locked sits around $129 billion, while traditional asset management handles approximately $128 trillion. That's not a pond versus lake comparison – it's more like a puddle versus the Pacific.

Institutions increasingly access crypto through regulated vehicles like ETFs and structured products rather than direct token purchases. So they're not rejecting the underlying assets necessarily – they're rejecting the blockchain rails those assets typically travel on.

The narrative flip becomes clear when you look at examples like Binance's recent $2 billion investment from UAE sovereign fund MGX. Instead of a token sale or traditional crypto fundraising, they went with a conventional stablecoin investment structure. Same company, same growth story, but they chose the traditional liquidity route.

What's emerging here is a different question entirely. Instead of asking "how do we bring institutions to crypto," maybe we should ask "how do we bring crypto projects to institutional liquidity?"

Why This Story Matters

What strikes me about crypto builders is how brilliant they are at creating financial primitives. The innovation happening in DeFi protocols, layer-2 solutions, and blockchain infrastructure is genuinely impressive. But from a capital access perspective, they're still competing in a $129 billion sandbox while largely ignoring the $128 trillion ocean next door.

The infrastructure for accessing that ocean already exists. As I wrote previously, wrappers like AMCs, trackers, CLNs are well-known, easy-to-use, and smoothly on traditional financial rails.  

Then there is the timeline angle: traditional token registration can take months and requires significant minimum scale, while regulated crypto products through established frameworks can happen much faster with lower barriers to entry.

As I see it, this isn't about abandoning DeFi principles or "going traditional." It's about scale arbitrage. The same innovation, the same underlying value proposition, but with access to liquidity pools that are literally 1,000 times larger.

As Lucas Ereth told me in our Assetization book, the banking system is simply “where the money is”.

The Bigger Picture

My point: the bridge out might ultimately be towards a much bigger opportunity than the bridge in.

Think about it this way: getting traditional investors comfortable with crypto is a conversion problem. You're asking them to change their behavior, learn new systems, and take on unfamiliar risks. But getting crypto projects access to traditional liquidity? That's more of a packaging problem. The investors, the capital, and the infrastructure already exist.

The regulatory environment is also shifting in favor of this approach. With institutions increasingly seeking off-exchange custody solutions and regulated access to crypto markets, they're positioning themselves to make crypto a standard asset class allocation, but they're doing so through familiar, regulated channels.

This doesn't mean every crypto project should rush to issue AMCs or pursue traditional fundraising. But for builders who are genuinely focused on scale and real-world impact, understanding these pathways is essential.

With this in mind, next week I will try to finally get to the promised continuation of my tool box article and dive deeper into the broader infrastructure story this connects to – how the standardized wrappers we've written about before can plug into what amounts to a global intermodal financial system.  

After all, the rails matter as much as what travels on them. 

Tom Lyons, Head of Communications, GenTwo