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The year 2025 brought the cryptocurrency industry into a new phase, characterized by significantly increased institutional participation. After years of caution and skepticism, large companies are now allocating significant capital to digital assets.
Many have asked why organizations have finally changed their attitude towards an industry they had previously avoided with great caution. BeInCrypto spoke with Aishwarya Gupta, Global Head of Payments and Real Assets at Polygon Labs, to break down the factors behind this change. Gupta explained the reasons why today’s institutional flows dominate the market and what this change means.
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Institutions dominate cryptocurrency flows: here’s why
Gupta noted that the institutions now represent approx 95% of cryptocurrency flowsWhile individual participation decreased to about 5-6%. This downturn reflects a shift from previous cycles based on retail-driven hype, to an increasingly influential market for structured finance.
Major asset managers, including BlackRock, Apollo, and Hamilton Lane, have allocated around 1-2% of their portfolios to cryptocurrencies, launched ETFs, and started driving tokenized investment products backed by blockchain.
Gupta stressed that the change lies not in the position of Wall Street, but in the infrastructure that … Now support the company’s activities. Explain that Polygon is an example of this:
Gupta said that partnerships with JPMorgan in the direct execution of the DeFi agreement overseen by the Monetary Authority of Singapore, with Ondo in token vaults, and with Amina Bank in regulated staking services, have shown that networks that support DeFi can also support global finance. He stated that the ability to scale and reduced transaction costs allow traditional finance to consider public blockchain as a viable option. He explained that organizations no longer need to experiment in sandboxes – they can now perform transactions on a reliable public network, compatible with Ethereum, which satisfies auditors and regulators.
Gupta said that institutions are entering the cryptocurrency space from two main directions: they are looking for returns and diversification, and they are looking to increase operational efficiency. The first wave focused on dollar-denominated returns through products such as token vaults and bank-managed staking, which provided a familiar and compatible framework for generating returns.
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Explain that the second wave is driven by the efficiency gains that the blockchain can provide: faster settlement, shared liquidity, and programmable assets that have encouraged major financial networks and fintech companies to try… Token box structures and cross-chain transfers.
The decline of individuals raises questions about the direction of cryptocurrencies as institutions take the lead
The CEO highlighted why behind the withdrawal of individual investors. He explained that the majority of retail investors left the market due to losses associated with speculative meme currency cycles and unrealistic profit expectations. He emphasized that this erosion of confidence has prompted many small investors to move away from the market, but he does not consider this a permanent or structural withdrawal.
Gupta told BeInCrypto that more structured and well-regulated products could gain the confidence of investors to be able to return to the market.
However, increased institutional participation has raised concerns about the potential dilution of decentralization in cryptocurrencies. Gupta explained that maturity and decentralization are not mutually exclusive if public and open networks remain the foundation.
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He explained that decentralization is threatened only when networks sacrifice their openness, not when new participants enter.
When building on public infrastructure instead of closed parks, the institutional adoption is not so much centralized cryptocurrencies as legitimized… The sector of the financial tradition is not to control cryptocurrencies, but to join the chain – it is not a takeover and an income, but a fusion of infrastructures, as the networks that support DeFi and NFT also host treasuries, ETFs said, and institutional operations.
Asked whether corporate dominance could slow innovation by prioritizing conformity over experimentation, Gupta acknowledged a tension. Despite this, he argued that it could ultimately benefit the sector.
The executive explained that the fast-paced, silo-breaking mentality produced tremendous creativity, but also led to huge losses and organizational hostility. Yes, organizations move slowly and focus too much on compliance, and yes, it can put a strain on innovation, but if done right, it shouldn’t kill innovation. On the contrary, it can push forward and force developers to see compliance as a way to foster innovation by incorporating it from the start. Progress may be slower, but it is stronger and more scalable.
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What’s next as institutions deepen their presence in cryptocurrencies?
Gupta’s forecast for future development will not be seen as a growing corporate stake Takeover of Wall Street On digital currencies, but rather joining an increasingly diverse and complex system.
He pointed out that the market now operates with high quality and slower institutional liquidity that generates returns and is subject to greater risk management. The market is no longer dominated by retail traders chasing hype and FOMO on centralized exchanges as was the case in 2017. Emotional trading has become less. Volatility will decrease as capital moves from speculation to achieving long-term returns. The narrative has changed, as cryptocurrencies are now considered more of a financial infrastructure than an asset class, he said.
A significant expansion is expected in Real Asset Tokensand a gradual increase in market stability as business activity develops to become more disciplined and less speculative. He also added that stronger regulatory integration is likely as traditional financial institutions continue to develop strategies on the chain.
Gupta expects institutional staking and the networks that generate the returns to continue to grow as regulated entities look for comprehensive ways to share in the returns on the blockchain. At the same time, he sees Interoperability issue Public chain tools that facilitate the seamless transfer of assets between different pools will become increasingly important as the company’s business expands.
