a16z Crypto: TradFi wants blockchain's utility, not DeFi's ideals

Traditional financial institutions are actively adopting blockchain, but this does not signify a merger with decentralized finance (DeFi), according to a16z Crypto, the cryptocurrency arm of global venture capital firm a16z. The firm explained that while the market anticipates a convergence, institutions are primarily interested in blockchain's practical benefits—such as cost reduction, improved payment efficiency, expanded distribution channels, and enhanced customer management—rather than its decentralized philosophy. Due to regulatory and internal control requirements, traditional finance struggles to embrace core DeFi principles like openness and anonymity. a16z Crypto noted that programmable financial infrastructure tailored to institutional needs is likely to become the new standard. The firm cited JPMorgan's institutional blockchain and the tokenized funds from BlackRock and Franklin Templeton as examples of using blockchain to streamline existing financial services, not as instances of direct participation in DeFi.