TradFi will sit out DeFi growth until security issues are resolved, executives say
DeFi’s long-term value is seen as coming from improving banks’ back-office infrastructure, not from competing as a trading venue. Executives said traditional financial firms want blockchain adoption, but security weaknesses, especially in cross-chain bridges, make large-scale use difficult. They pointed to repeated hacks as a major barrier to growth, with recent exploits highlighting persistent risks and poor capital-management discipline in parts of DeFi. Traditional banks are already addressing some of these gaps. Societe Generale Forge has tokenized structured products and green bonds on public blockchains, but had to create regulated stablecoins to provide the missing cash-settlement layer. The takeaway is that institutional users still prefer regulated custodians and trusted intermediaries over self-custody and open-source DeFi, so banks are likely to remain central unless onchain security materially improves.
