In the past week alone, a flurry of announcements from major financial and technology players underscored the balancing act the digital asset space faces between achieving interoperability at global scale and managing the compliance needs that brings.

Visa added five more blockchains to its global stablecoin settlement pilot, bringing its total to nine; while Meta started offering stablecoin payouts to a limited group of creators. Elsewhere, the Walmart-backed FinTech OnePay announced plans to add stablecoin payouts and account funding to its banking product through a new partnership with the Tempo blockchain; and Anchorage Digital launched a partnership with stablecoin infrastructure company M0 to merge M0’s infrastructure capabilities with Anchorage’s regulated issuance experience to serve a “growing universe of stablecoin builders.”

But as institutions race to unlock interoperability and cross-border efficiency, regulators are confronting a familiar set of concerns: money laundering, sanctions evasion and systemic risk. On Tuesday (April 28), a WSJ report flagged that individuals sanctioned by the U.S. for their participation in the Prince Group scam-ring had later worked to enable the use of the Trump family-linked World Liberty Financial’s stablecoin, USD1, on its network.

The news underscores that as stablecoins scale, so do their risks. Fraud, scams and illicit activity remain persistent challenges. But the growing regulatory push is not necessarily a headwind for the industry. In many respects, it reflects a recognition that stablecoins may be becoming systemically important.

Read more:  The Privacy Problem Institutions Can’t Ignore in Stablecoins

Chasing Interoperability While Navigating Compliance

The very features that make stablecoins attractive such as speed, accessibility and borderless transferability can also make them susceptible to misuse. Unlike traditional banking systems, where intermediaries play a central role in monitoring transactions, stablecoin networks often rely on a patchwork of exchanges, wallet providers and on-chain analytics firms to enforce compliance.

In 2025 alone, an estimated $17 billion was lost to crypto-related fraud, with AI-enabled scams dramatically increasing in sophistication.

“The amount of content created for scamming people is absolutely through the roof. Our customers are swamped,” Emmanuel Marot, vice president of products at Chainalysis, told PYMNTS in a conversation about the company’s “blockchain intelligence agents,” unveiled earlier this March.

Still, the future of the digital asset space “sure looks bright,” Marot added, noting that “there’s a real-world usage and a need to make sure that the money goes to the right place.”

Among the clearest signals of crypto’s real-world usage comes from payment incumbents adopting them at scale. Visa’s stablecoin settlement pilot has already reached an annualized run rate of $7 billion, growing roughly 50% quarter over quarter.

In effect, Visa is building a multi-chain settlement fabric. Settlement—the behind-the-scenes process of reconciling transactions between banks—has long been slow, opaque and fragmented. Stablecoins can potentially compress that timeline from days to minutes while also reducing intermediary costs.

Elsewhere, Meta this week began offering stablecoin payments to creators, effectively turning its social platform into a financial one. This move revives an idea Meta explored—and abandoned—with its earlier digital currency initiative: embedding money directly into digital ecosystems. The difference now is that stablecoins provide a ready-made, interoperable solution, eliminating the need to build a proprietary currency from scratch.

See also: Treasury Calls for Programmable Financial Enforcement Across Crypto 

Building the Picks and Shovels

Behind the scenes, a new class of infrastructure providers is emerging to support this ecosystem. Companies like M0 and Anchorage Digital are positioning themselves as the foundational layer for stablecoin issuance and custody.

This “infrastructure-as-a-service” model mirrors earlier waves in cloud computing. Just as AWS enabled startups to build without owning servers, these platforms allow companies to issue and manage digital dollars without building blockchain expertise from scratch.

The result may be a rapid proliferation of both stablecoin use cases and issuers.

That proliferation was precisely what Anchorage’s CEO advocated for on the latest episode of “From the Block.” Rather than a handful of dominant players, Nathan McCauley said he envisions thousands of crypto-native banks competing in a decentralized financial landscape, emphasizing that, “in a world where there are 4,000 banks, we’re powering 3,999 of them.”

What emerges from these developments is not a single trend but a layered transformation. At the base are blockchains, increasingly interconnected and specialized. On top sit stablecoins, acting as the unit of account. Above that, infrastructure providers enable issuance, custody and compliance. And at the surface, applications from payments to social platforms help deliver user experiences.

This stack is modular, programmable and global by design. But can it scale?

Findings in the March PYMNTS Intelligence report, “Stablecoins Gain Ground: Why CFOs See More Promise There Than in Crypto,” reveal that while more than 4 in 10 (42%) middle market companies have at least discussed stablecoins, only 13% have reported actual stablecoin use.

After initially focusing on stablecoin payouts and instant account funding, the collaboration will expand into additional use cases over time, the companies said in a Tuesday (April 28) press release.

OnePay currently powers instant payouts and direct deposit access for millions of American consumers and workers, according to the release.

With the addition of stablecoin infrastructure, the company aims to enable always-on settlement, lower infrastructure costs and new ways to move money in and out of its platform, the release said.

As well as building customer-facing products on stablecoin rails, OnePay plans to actively support the infrastructure by launching a validator on Tempo, per the release.

“Tempo’s payments-focused architecture and built-in privacy and compliance tooling make it the right infrastructure partner as we expand into stablecoin-powered experiences for our customers,” OnePay Head of Crypto Pierce Harger said in the release.

PYMNTS reported Thursday (April 23) that OnePay is working to combine banking, credit and everyday money tools into an all-in-one financial app.

Tempo was incubated by financial infrastructure provider Stripe and crypto investment firm Paradigm, who announced the new company in September 2025 and described it as a “payments-first blockchain” that is optimized for stablecoins and real-world payments, PYMNTS reported at the time.

Executives involved with the launch said in September that Tempo is optimized for stablecoins and high-throughput, low-latency payments, provides an alternative to crypto infrastructure that is focused on trading, and aims to provide a way for large enterprises to go on-chain.

Stripe said in February that early Tempo participants on the blockchain’s testnet include Visa, Nubank and Shopify, which were already testing use cases such as global payouts, embedded finance and remittances, while Klarna launched a bank-issued stablecoin on Tempo to enable cheaper cross-border settlement.

Ani Narayan, GTM at Tempo, said in the Wednesday press release that products that solve real payment problems for everyday users will drive the next wave of on-chain adoption.

“OnePay serves millions of workers and consumers who stand to benefit from faster, cheaper money movement,” Narayan said. “We’re excited to partner on shaping the next generation of consumer finance.”

While that threat is years away, Solana has a well-researched plan ready for when it is needed, the group said in the post.

Two of Solana’s validator client developers, Anza and Firedancer, have been studying post-quantum migration paths and, working independently, arrived at the conclusion that a post-quantum scheme called Falcon provides a solution. Both have built an initial implementation that is now available, according to the post.

Falcon provides a post-quantum digital signature scheme with compact signatures that is designed for high-throughput blockchain use.

“While no change is required today or likely anytime soon, there is a clear, well-researched plan that can be activated if and when the time comes,” Solana said in the post. “The migration work is manageable, the transition can happen quickly when the time is right, and network performance is not expected to see a meaningful impact.”

In addition, Blueshift’s Solana Winternitz Vault, which has been in place for two years, provides a direct path for quantum resilience, per the post.

Looking ahead, Solana plans to continue its quantum research and its evaluation of Falcon and alternatives, adopt a post-quantum scheme for new wallets if quantum becomes a credible threat, and migrate existing wallets to the chosen scheme.

“As the quantum conversation continues to evolve, the Solana ecosystem is prepared, with the research, infrastructure and ecosystem alignment to back it up,” the group said in the post.

PYMNTS reported in January that Q Day, the moment quantum computers can practically break elliptic curve cryptography, promises to render redundant the computational codes that secure modern finance, with crypto likely to be harder hit than most.

While quantum-safe security exists and is already being used by companies such as Apple and Zoom, deploying the equivalent capabilities across public blockchains that are by nature decentralized represents a thornier governance challenge, the report said.

On March 25, Google released a report suggesting that if firms don’t migrate their data over to post-quantum cryptography in the next three years, by 2029, they will be exposed to an existential threat.

The new offering, announced Monday (April 27), includes fiat-to-stablecoin and stablecoin-to-fiat capabilities from Banking Circle’s core platform, and follows the company’s receipt of a crypto-asset service provider (CASP) license earlier this month.

“The award of our CASP license is an important milestone for Banking Circle, as well as for the broader payments ecosystem,” Laust Bertelsen, the company’s CEO, said in a news release. “Stablecoins have fast evolved from a peripheral innovation into core infrastructure for cross-border settlement, treasury management, and financial inclusion.”

The release noted the increasing size of the stablecoin market: $293 billion in market capitalization, with yearly payment-related transaction volumes estimated at $387 billion, and monthly on-chain volumes of more than $9.3 trillion.

Against this backdrop, the company added, Banking Circle’s stablecoin settlement service is aimed at offering a “fully integrated solution” for institutions looking to capitalize on the speed and efficiency of stablecoin rails.

“By combining the 24/7 availability of blockchain-based payments with the compliance, security, and risk management standards of a regulated bank, the solution addresses longstanding inefficiencies in traditional global settlement rails,” the company said.

Research by PYMNTS Intelligence shows that 42% of middle market companies have at least discussed, tested or used stablecoins, businesses would rather work with banks than crypto-native wallets.

“Crypto-native wallets, while efficient, introduce unfamiliar risks: private key management, fragmented reporting, uncertain custody standards and evolving regulatory interpretations,” PYMNTS wrote last month.

“Banks, by contrast, provide a trust layer that CFOs already understand. They offer established custody frameworks, standardized reporting and compliance processes that align with existing audit requirements.”

When accessed via a bank, that report added, stablecoins are “effectively wrapped in the institutional safeguards that finance teams depend on.”

The research found that nearly half of surveyed CFOs felt that integration with major banks would make stablecoins more relevant to their operations, although 67% cited regulatory and compliance uncertainty as a major obstacle to overcome.

Considerably fewer pointed to speed or cost savings as deciding factors, suggesting that adoption will be fueled by trust rather than performance.

“We don’t start with the asset,” Biswarup Chatterjee, global head of partnerships and innovation, Citi Services at Citi, told PYMNTS. “We typically start with our client need, and then we look at the pros and cons of each type of asset or financing instrument.”

The new Stablecoin Reserves Portfolio (MSNXX) is designed to align with the stablecoin reserves investment requirements of the GENIUS Act, the company said in a Thursday (April 23) press release.

This investment solution targets preservation of capital, daily liquidity and maximum current income. It invests only in cash, U.S. Treasury bills, notes and bonds with remaining maturities of 93 days or less, as well as overnight repurchase agreements collateralized by U.S. Treasury securities and/or cash, according to the release.

“The significant increase in stablecoin issuers as well as the growing number of assets held in stablecoins represents an evolving portion of the marketplace that is ripe for future growth,” Fred McMullen, co-head of global liquidity at Morgan Stanley Investment Management, said in the release.

Morgan Stanley is pursuing a firm-wide strategy of expanding access to digital investment solutions, making them more broadly accessible to all client segments, Amy Oldenburg, head of digital asset strategy at Morgan Stanley, said in the release.

“Developing innovative ways to work with stablecoin issuers is another step towards modernizing the financial infrastructure and a key way to improve our institutional clients’ experience,” Oldenburg said.

In another initiative in this area, PYMNTS reported in February that Morgan Stanley submitted an application to the Office of the Comptroller of the Currency (OCC) for a charter for a new institution called “Morgan Stanley Digital Trust, National Association” as a national trust bank with requested trust powers.

The application is an attempt to stand up a new federally chartered legal entity optimized for digital asset activity. The goal for the new institution is Morgan Stanley trying to own the custody, settlement and fiduciary plumbing layer of blockchain finance under U.S. bank supervision, according to the report.

In January, it was reported that Morgan Stanley was entering the cryptocurrency exchange-traded fund (ETF) space by submitting paperwork for a Bitcoin Trust and a Solana Trust, each of which would hold the individual cryptocurrencies.

The company announced the freeze Thursday (April 23), saying it came following information shared by U.S. authorities about activity connected to unlawful actions.

“When wallets are identified as connected to sanctions evasion, criminal networks, or other illicit activity, Tether can move to restrict those assets,” the company wrote in a blog entry. “That work has become a routine part of the company’s response to lawful requests from authorities in the U.S. and abroad.”

Tether, whose USDT is the largest stablecoin by volume, added that it has been involved in supporting law enforcement in 2,300 cases around the world, leading to the freezing of more than $4.4 billion in assets.

Public blockchains, the company argued, offer investigators and issuers something cash can’t: a visible trail that lets them follow transactions, flag wallets and freeze assets.

“USDT is not a safe haven for illicit activity,” said Paolo Ardoino, CEO of Tether. “When credible links to sanctioned entities or criminal networks are identified, we act immediately and decisively. Recent events have shown what happens when platforms fail to move quickly, enforcement breaks down, users are exposed, and trust erodes.”

The company’s announcement comes in the wake of a high-profile crypto crime that has erased around $9 billion from the decentralized finance (DeFi) lending space: last week’s exploit of the Kelp DAO platform.

In the most recent episode of the “From the Block” podcast, PYMNTS CEO Karen Webster and Ryan Rugg, global head of digital assets for Citi Treasury and Trade Solutions, examined why that exploit was not just a technical failure, but a behavioral one.

While earlier attacks targeted private keys or flawed smart contracts, this breach was aimed at the connective tissue of blockchain ecosystems: the messaging layer that allows for interoperability across chains.

“Past hacks were due to stolen keys or bugs in smart contracts; this one was convincing the vault the thief was actually the owner,” Rugg said.

Meanwhile, Tether is helping another DeFi exchange—Drift Protocol—relaunch after a separate breach earlier this month, giving that company $147 million in funding.

Drift announced the funding last week, as well as the news that it would begin using Tether as its settlement layer, rather than previous settlement partner Circle.

What would Charles Cascarilla’s 2015 self make of where digital assets landed in 2026?

It’s the kind of question that hangs over a conversation like the one PYMNTS CEO Karen Webster and Citi’s Ryan Rugg hosted on the latest episode of the “From the Block” podcast. And the honest answer from someone whose been there ever since bitcoin was three cents a coin is less triumphant than his earlier self might have hoped for, and more interesting for it.

Sixteen years into his bet on blockchain rewriting financial services, Cascarilla, co-founder and CEO of Paxos, is no longer pitching a parallel system that leaves banks behind. He’s pitching something different and arguably more useful. In his view today, crypto isn’t replacing finance. It’s turning into it.

That sentence would have read like a concession a decade ago. In 2026, Cascarilla says, it sounds a lot like progress.

Is This Finally ‘the Year?’

Webster’s framing was one everyone in the industry keeps circling back to. Is 2026 the year crypto “gets real,” or is it another cycle of anticipation in a new outfit?

The perspective from Cascarilla and Rugg is somewhere between the two. The “between” is where the story gets interesting.

What’s genuinely new, Cascarilla said, is the backdrop. Regulatory clarity in the U.S., although imperfect and still evolving, has done something technology demos alone never could. It has given large enterprises permission to move.

“The regulatory clarity that we’ve talked about has given enterprises confidence, because they don’t act in gray areas,” Rugg said. “It has to be permissible for them to act.”

Permission is what turns an industry from speculation into infrastructure. Rugg, who has spent the past decade working the seam between banks and blockchain, put the arc bluntly: “We went after tokenizing IP, real estate, everything. And now here we are, circling back.” The circling back is to the unglamorous stuff, payments, stablecoins, tokenized deposits. Which also happens to be where money moves.

Small on Purpose

The most useful reframe of the episode was Cascarilla’s on scale. Crypto takes up enormous cultural space for something that represents, in financial terms, a rounding error. “Of all the assets in the world, guess how many are on the blockchain at the moment?” he asked. “Essentially zero. You can round to zero.”

That sounds like a bear case. Cascarilla means it as a bull one. If the total addressable market is effectively the entire $900 trillion global financial system, the opportunity isn’t “adoption” in the narrow crypto-trading sense.

It’s what he calls “re-platforming.” Moving the rails underneath payments, assets and capital markets onto programmable infrastructure. Where are we in that arc?

“The first pitch of the first inning,” he said.

Right in between nowhere and just getting started.

The Coexistence Thesis

A subtler shift in the conversation, and one that would have been heretical a few years ago, is how little of it was about disruption.

Stablecoins, Cascarilla argued, are likely to follow the money market fund playbook. Once feared as a threat to banks, they are ultimately an expansion of the system rather than a shrinking of it, he said.

“You’re just actually growing the addressable market,” he said, particularly by extending dollar access globally.

Rugg went further.

“I don’t view it as stablecoins or tokenized deposits. I think there are different use cases for each one, and they could coexist together quite well.”

Coexist. Not disrupt, not replace. For an industry that spent a decade insisting it would eat banking alive, the pivot to “and” instead of “or” might be the most institutionally grownup thing crypto has done.

Headwinds That Haven’t Gone Anywhere

Webster didn’t let the optimism stand unexamined. Could any of this survive a change in political administration?

Cascarilla, to his credit, didn’t pretend otherwise. “You never know what administration’s going to come into place,” he acknowledged. The blunt admission that today’s tailwind is a tailwind, not a guarantee. Favorable policy is, at best, a window.

And then there’s the other headwind, one made of trust rather than policy.

“If you had another large failure like FTX, it would definitely set back the industry in a big way,” he said. “Financial services always comes down to, Who can you trust?”

One bad actor, and the window closes on everyone.

What Remains to Be Proven

So, what would Cascarilla’s 2015 self say to his “and not or” self today?

Probably that the destination still looks roughly right and the timeline looks laughably off.

What’s been proven, 16 years in, is that the technology works, that regulators can be reasoned with, and that large institutions will eventually build on rails they once waved away.

What remains to be proven is whether any of it compounds. Whether this becomes the structural transformation the early pitch promised, or crypto’s real legacy turns out to be more subtle. Upgrading the plumbing of the system it once set out to replace.

Either outcome would be the most consequential thing to happen to financial services this decade. The unglamorous version just takes longer to notice.

The American Bankers Association (ABA), Bank Policy Institute (BPI), Consumer Bankers Association(CBA) and Independent Community Bankers of America (ICBA) made this request in a Tuesday (April 21) joint letter addressed to the Treasury Department, Federal Deposit Insurance Corporation (FDIC), Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC).

In their letter, the banking groups said that while these organizations have issued their respective notices of proposed rulemaking (NPRMs) for the GENIUS Act, the Office of the Comptroller of the Currency (OCC) has not yet issued its final rule after its NPRM earlier this year.

They asked the organizations to extend the deadline for public comments on their respective NPRMs to 60 days after the OCC issues its final rule implementing the GENIUS Act for the entities that are subject to its jurisdiction.

The associations added that each of the NPRMs refers to the OCC’s framework, and are “substantively tethered” to it, although it has not yet been finalized. The OCC’s proposed rule was published in the Federal Register on March 2 and is open for comment until May 1.

“The public is entitled to the opportunity to review coordinated proposals together, particularly to assess whether the agencies are proposing consistent, risk-based approaches and to identify any divergences or gaps that warrant attention,” the banking associations said in the letter. “A comment period extension calibrated to the finalization of the OCC’s rule would allow all interested parties to submit integrated, holistic comments across the full body of implementing rulemakings.”

The GENIUS Act became the country’s first-ever piece of crypto legislation when President Donald Trump signed it into law in July. PYMNTS reported at the time that the long-awaited policy framework could signal a new era for crypto in the U.S., or at least for the stablecoins the GENIUS Act was written to regulate.

PYMNTS reported April 8 that the GENIUS Act remains the first and only crypto policy signed into law and that regulators are now operationalizing it to create a unified supervisory regime.

The listing, announced Wednesday (April 22), comes amid what the cryptocurrency exchange describes as a pivotal moment for these digital assets.

“Stablecoins are having their ‘iPhone moment,’“ Coinbase wrote on its blog. “They are no longer just a tool for crypto traders; they are becoming central to the global payments system. As the global economy moves online, stablecoins are set to become the default way people and businesses move money both globally and locally.”

The company noted that the stablecoin market cap has reached over $300 billion, with some projections showing it becoming a $2 trillion asset class by 2028. Last year, stablecoins settled more than $30 trillion in transactions.

Coinbase said this new listing is also part of an effort to expand access to locally-denominated stablecoins. In this case, the focus is on the U.K.

The company added that for the U.K. to become a global crypto hub, it needs to maintain a supportive regulatory environment. The issuer of tGBP, BCP Technologies, is registered with the Financial Conduct Authority (FCA), and has participated in the FCA’s regulatory sandbox.

Despite the rising popularity of stablecoins, research from the Federal Reserve and PYMNTS Intelligence show the tokens haven’t yet transformed the payment system.

The Fed findings, published earlier this month, show that the vast majority of the tokens are not part of the real economy. Rather, they’re “sitting idle or circulating within crypto markets instead of being used to pay for goods and services,” PYMNTS wrote.

The research shows that less than 1% of stablecoins are used for payments, based on transaction volume and inferred velocity, while close to half of all stablecoins are being used within crypto finance, including exchanges, lending protocols and related infrastructure.

Meanwhile, the PYMNTS Intelligence research found that more than four in 10 middle market firms report having at least discussed or tested stablecoins, but just 13% report actual use.

The gulf between awareness and implementation highlights a continual hesitation among finance leaders. Stablecoins are viewed as potentially useful, but not yet woven into regular financial operations.

“The data also helps explain the idle balances identified in the Fed’s research. Firms are not rejecting stablecoins,” PYMNTS wrote. “Instead, they are holding back until the operational case becomes clearer, particularly as they weigh how these tools would integrate with treasury systems and payment workflows.

For the crypto sector, big enough operational crises can be viewed as industry-wide reputational crises.

And by any measure, the April 18 exploit of the Kelp DAO decentralized finance (DeFi) platform, which saw roughly $292 million siphoned from a cross-chain restaking protocol and set off a chain reaction that erased nearly $9 billion from the largest DeFi lending platform, is fast becoming a reputational, even existential, crisis for DeFi.

In the latest episode of the “From the Block” podcast, PYMNTS CEO Karen Webster and Ryan Rugg, global head of digital assets for Citi Treasury and Trade Solutions, sat down to unpack why the weekend’s DeFi exploit was not just a technical failure, but a behavioral one.

Unlike earlier attacks that targeted private keys or flawed smart contracts, this breach struck at the connective tissue of blockchain ecosystems: the messaging layer that enables interoperability across chains.

“Past hacks were due to stolen keys or bugs in smart contracts, this one was convincing the vault the thief was actually the owner,” Rugg said.

As Webster put it, “We’re learning, literally hour by hour, what happened.”

DeFi Industry’s Existential Question

At the heart of the issues being surfaced by the DeFi exploit are the unavoidable tensions between crypto’s push for open, interoperable systems versus the institutional demand for security and control that has long defined, and in some places limited, blockchain’s evolution.

“Does this delay the institutional adoption of DeFi? Maybe,” Rugg said. “It is going to take some of the confidence out of the market.”

But she stopped short of calling the incident a defining setback, noting that any institutionally driven decision will likely hinge on whether firms can implement “proper redundancy and security at every layer where the trust resides.”

In other words, the future of DeFi could look less like a radical departure from mainstream finance and more like an extension of it. After all, the weekend’s exploit maneuver struck at the heart of DeFi’s design, its composability.

But this incident reveals the flip side: Composability also creates tightly coupled risk. A failure in one protocol can cascade across many, not because of direct exposure, but because assets are reused and rehypothecated across the system.

In practical terms, the Kelp DAO attackers forged a cross-chain message that triggered the bridge to release funds that had never been legitimately burned. The exploit hinged on a weakness in the validation process by isolating a single validator acting as a point of failure.

But the same features that allow assets to flow seamlessly between platforms, the attack revealed, can also allow compromised collateral to propagate risk system-wide. A failure in one protocol can cascade across many, not because of direct exposure, but because assets are reused and rehypothecated across the system.

While DeFi’s promise has long rested on the idea that transparency substitutes for trust, in moments of stress, that transparency can also accelerate panic as users see risk materializing in real time and exit instantly.

“You have to rebuild the confidence,” Rugg said, outlining the standard response playbook: containment, patching vulnerabilities, increasing validator redundancy and engaging enforcement agencies.

Interoperability Meets Institutional Reality

The paradox of DeFi is that it was built to eliminate intermediaries, yet now faces the same challenges that define modern finance: how to manage systemic risk in a highly interconnected system. And the Kelp DAO incident underscored a critical asymmetry afflicting blockchain applications. Despite capital moving instantly across chains, risk signals can often lag.

Interoperability, for example, is widely seen as essential for scaling digital assets across banks, FinTechs and enterprises. But the very bridges that enable that connectivity are also emerging as the most vulnerable points in the system.

In the case of the Kelp DAO exploit, the compromised asset (rsETH) continued to be priced near its expected value by on-chain oracles even after the underlying system had been breached. That mismatch allowed the attacker to extract additional value from downstream protocols, effectively turning a single exploit into a multiplatform liquidity event.

“There’s a reason we are still on a permissioned blockchain. We want interoperability and are driving toward that, we’ve heard our clients loud and clear around their desire for multi-bank, multi-asset-like solutions … but we need to make sure that what we’ve done in our traditional world to ensure safety and soundness now comes into this space as well,” Rugg said.

“Safety and soundness are first and foremost to large institutions like us,” she stressed, drawing a parallel between DeFi protocols and early internet routing before modern security standards were established.

Still, the road ahead is a long one. The question for institutional blockchain may not be one of whether true interoperability will arrive, but whether it can do so without compromising the very trust in the financial system it aims to decentralize.