- a16z said institutions adopt blockchain for efficiency while avoiding core DeFi features like permissionless access.
- Banks prioritize compliant blockchain tools, including tokenization, programmable money, and atomic settlement.
- The firm said blockchain builders must distinguish between enterprise clients and open crypto network users.
Venture capital firm a16z said traditional financial institutions are adopting blockchain technology without embracing decentralized finance. In a published analysis, the firm argued banks and asset managers continue selecting blockchain features that improve efficiency while preserving existing compliance and operational controls. According to a16z, that approach is creating a new category of programmable financial infrastructure.
Institutions Select Specific Blockchain Features
According to a16z, financial institutions evaluate blockchain through cost, risk, control, and operational requirements. As a result, they adopt technologies that improve existing financial processes without changing institutional governance models.
The firm said atomic settlement, programmable money, tokenized collateral, and shared ledgers reduce operational costs and reconciliation work. However, institutions generally avoid features including permissionless access, pseudonymity, and immutable execution because those characteristics conflict with existing regulatory requirements.
According to a16z, projects such as JPMorgan’s permissioned blockchain, BlackRock’s tokenized funds, and Franklin Templeton’s blockchain products illustrate that approach. The firm said those initiatives use blockchain infrastructure while retaining institutional oversight.
Compliance Shapes Institutional Adoption
The report said compliance remains a central requirement for enterprise blockchain deployments. Financial institutions continue requiring know-your-customer checks, anti-money laundering controls, sanctions screening, investor verification, and regulatory reporting.
According to a16z, those requirements often require significant architectural changes before institutions can deploy blockchain infrastructure. The firm added that future legislation, including the CLARITY Act, could expand institutional access to permissionless systems. However, it said institutions will continue evaluating technology through established risk frameworks.
The report also highlighted stablecoins as an example of selective blockchain adoption. According to a16z, banks increasingly use programmable dollars because they improve settlement and capital movement rather than promote decentralized finance.
Builders Face Two Separate Markets
According to a16z, companies building blockchain products should distinguish between institutional customers and open crypto networks. The firm said enterprise software requires compliance, procurement, governance, and lengthy sales cycles, while open networks prioritize developers, liquidity, and composability.
The report cited Canton as infrastructure designed specifically for institutional requirements. It also referenced Morpho’s collaboration with Apollo’s ACRED fund as an example of adapting existing decentralized finance technology for institutional distribution under regulated structures.
