Financial institutions have shown great interest in digital assets. According to a research report by Elliptic, 77% of financial institutions see a compelling business case to advance their digital asset plans. Even the most long-standing financial institutions are making critical investments in decentralized finance.

Nonetheless, despite years of promise and technological advancement, mass adoption remains elusive.

At DigiAssets 2024, there was a panel discussion called "Strategies for Driving Digital Asset Adoption: What’s Holding Us Back and What Will Open the Floodgates?” There, a group of industry experts examined the persistent barriers to widespread adoption of digital asset investment among financial institutions

Here, we’ll explore those insights and reveal what they identified as the breakthrough developments that could finally bring billions of institutional investors on-chain.

The Current State: Progress Amid Persistent Challenges

The digital asset landscape has evolved dramatically. Originally viewed as a high-risk novelty market, it quickly gained acceptance among some investors.

Institutions waited for a few years before joining the market, but they are now beginning to make substantial investments.

The Introduction of Digital ETPs

Investments have grown for several reasons, one of which is clearer guidance from governments about how the market should be regulated. However, it is impossible to ignore the institutional validation brought on by the emergence of digital exchange-traded products (ETPs).

According to a report by EY, 55% of those who currently hold cryptocurrency do so through an ETP. Furthermore, 69% of those who plan to make investments in 2025 stated they intend to invest via an ETP.

One panelist from T-Mobile highlighted this transformation perfectly:

"The success of ETPs has been enormous. It is nearly impossible for any large asset manager to look around the space and ignore those types of numbers." 

These products have broken every record for ETF launches, signaling a fundamental shift in institutional acceptance.

Comparison to the Dot-Com Boom

However, this institutional progress masks deeper structural challenges that continue to prevent mainstream consumer adoption. The industry faces a familiar pattern that a panelist from Pantera Capital, the longest-standing crypto asset manager in the U.S., described bluntly:

"The adoption question is the most ubiquitous question out there,” they said. "The digital asset industry has been promising a breakthrough for years, but many people are understandably skeptical about whether it’s actually coming.”

The panelists view the industry in the same light as the dot-com boom of the late 1990s and early 2000s. It has taken some time to mature, but growth is inevitable:

"If you look back at the early 2000s, after the dot-com crash, it took six or seven years before we saw mainstream consumer applications emerge. During those years, most of the progress was happening behind the scenes, as the necessary infrastructure was being built out. Now, we’re starting to see more use.”

Practical Barriers: The User Experience Issue

The most immediate barrier to mass adoption remains the fundamental challenge of user experience (UX). Institutional investors and traditional finance practitioners need access to intuitive tools for engaging in DeFi, especially if they are approaching digital assets for the first time.

Clunky Interfaces Drive Users Away

One panelist identified poorly implemented interfaces as a core industry struggle:

"One of the things that we have struggled with for a long time as a sector is incredibly difficult to access user interface. If you don't come from this world, it's really difficult to do some of these things".

This accessibility problem creates a vicious cycle. Potential users attempt to engage with digital asset platforms, encounter frustrating interfaces, and simply give up.

The complexity extends beyond simple navigation issues. Traditional users expect the same level of polish and intuitive design they find in mainstream financial applications. When crypto platforms fail to meet these expectations, they effectively exclude the vast majority of potential users who lack the technical expertise or patience to navigate poorly designed systems.

The GitHub Problem

The industry has developed what could be called the "GitHub problem.” Solutions that work well for developers may seem viable, but they remain incomprehensible to regular consumers.

Addressing this issue requires a critical shift in focus from serving crypto-native users to designing for mainstream adoption. The most successful digital asset products will be those that hide their blockchain infrastructure entirely, presenting users with familiar, intuitive experiences.

Regulatory Uncertainty: The Invisible Barrier

Regulatory uncertainty continues to create significant friction for both institutional adoption and product development. The leader from Pantera Capital highlighted how this uncertainty blocks otherwise straightforward implementations:

"Most tokenization is just securitization, but they're difficult to do because the rules around tokenization are not clear."

This regulatory fog affects everything from basic compliance procedures to strategic business decisions. Companies that want to integrate digital assets into their operations face a complex web of unclear guidelines and potential enforcement actions.

The Compliance Burden

Traditional companies exploring digital asset integration encounter unexpected compliance challenges. During the panel, a leader from Hunting Hill Global Capital, an asset manager with over a decade of traditional finance experience, described how consumer brands struggle with the investment management aspects of blockchain integration:

"These companies are running into challenges that look a lot like investment management, such as figuring out compliance, custody, and pricing. They aren’t used to dealing with these issues, which are second nature for institutional investors in the U.S. While they may have figured out the customer-facing side, the back-end financial processes are still a big hurdle for them."

These operational challenges force companies to develop entirely new competencies or partner with specialized service providers, adding cost and complexity to digital asset adoption.

Institutional Hesitation: Traditional Finance Holds Back

Traditional financial institutions remain cautious about digital asset exposure, despite growing institutional acceptance. One panelist observed a gradual shift in investor appetite.

"Market-neutral approaches, such as earning the funding rate by lending dollars or shorting futures while holding spot Bitcoin, have worked well over the past few years," they said. "Today, investors are asking how they can capture more upside while still managing risk, using all the unique tools available in crypto that aren’t found in traditional finance."

This evolution suggests that institutions are becoming more comfortable with digital asset risk, but they're proceeding cautiously. Many prefer hedged exposure or market-neutral strategies that limit downside risk while allowing participation in potential upside.

Infrastructure Requirements

Institutional adoption requires sophisticated infrastructure that meets traditional finance standards.

The FTX collapse served as a watershed moment for many in the industry. The exchange’s downfall resulted in "widespread mistrust among the public,” according to one report. As the third-largest crypto exchange, its collapse "not only shocked the market but also shook the very foundation of the crypto industry, revealing major vulnerabilities in what investors perceived as a promising and robust ecosystem.”

This forced the industry to adopt more rigorous standards around custody, segregation of duties, and operational procedures. These improvements have made institutional participation more feasible but have also highlighted the infrastructure gaps that previously existed.

Breakthrough Drivers: What's Finally Working

Thankfully, there is evidence that institutional asset adoption is gaining momentum. This is due mainly to the success of ETFs, maturing infrastructures, and a higher level of dedication toward the user experience in emerging applications, exchanges, and platforms.

ETF Success Validates the Asset Class

The success of Bitcoin and Ethereum ETFs has provided a critical bridge between traditional finance and digital assets. These products solve multiple adoption barriers simultaneously:

• Familiar regulatory framework
• Established custody solutions
• Integration with existing portfolio management tools
• Tax-advantaged account compatibility

Infrastructure Maturity Enables Real Use Cases

The development of decentralized physical infrastructure networks (dPIN) represents a breakthrough in practical utility. A panelist’s personal experience with the Helium blockchain, a decentralized network for IoT devices, illustrates this evolution:

"I switched my entire family's phone plan to Helium," they said. "We've run a helium hot spot at home. We are now paying our phone bill to ourselves.

This type of real-world utility helps users understand Web3 economics in concrete terms. Blue predicted this understanding would drive broader adoption: "These types of things that are easier to use, that are accessible, can introduce people to the concept of Web3 economics".

User Experience Evolution

The industry is finally prioritizing user experience over technical complexity. Applications like Polymarket demonstrate this shift—most users don't even realize they're using blockchain technology.

"From the customer's perspective, they don't care if something is on a blockchain or not," said a panelist. "They just care if it's better, faster, cheaper."

Successful adoption will come from applications that provide superior user experiences while hiding their blockchain foundations.

The Path Forward: Integration, Not Revolution

The breakthrough applications won't be explicitly about cryptocurrency or blockchain technology. Instead, they'll be better versions of existing services that happen to use blockchain infrastructure.

Gaming applications, prediction markets, and social platforms that happen to use blockchain technology represent this evolution. These applications succeed because they prioritize entertainment value and user experience over technical innovation.

Users engage with them for their primary function, not their blockchain features.

Furthermore, AI agents will provide users with simplified interfaces while managing sophisticated operations in the background. This could solve the user experience problem by abstracting away technical complexity.

Finally, clear regulations will unlock institutional adoption by providing compliance frameworks and reducing regulatory risk. As one panelist put it: "We just need clear regulation, and adoption will take care of itself.”

To learn more, don't miss the next Digital Assets US conference. It's happening from October 20-21st, 2025 at the JW Marriott Miami.