thestreet.com
Decentralized finance has long promised open financial markets that anyone can access without intermediaries. Despite the rapid growth of crypto infrastructure, large financial institutions have remained cautious.
According to Henry Zhang, founder and CEO of DigiFT, the barrier is not the technology itself. It is trust.
In an interview with TheStreet Roundtable, Zhang explained how institutions evaluate DeFi.
What does "institutional grade" mean?
“Institutional grade sounds like one phrase, but it actually means many things,” Zhang said. “It includes the quality of the underlying assets, the legal structure, the governance, the risk management, and the disclosure.”
Those requirements are familiar to traditional finance but still developing in many crypto markets. Institutions need clear legal definitions of what a token represents, how it links to underlying assets, and who is responsible if something goes wrong.
Zhang argued that without those safeguards, large pools of capital simply will not participate.
“If it’s not institutional grade, there will be no trust,” he said. “And without trust, there will be no serious money and no serious business.”
The institutional trust layer
The idea of building “trust” in crypto may sound contradictory to early blockchain ideals. Bitcoin and many early crypto projects emphasized trustless systems, where users relied on code rather than institutions.
Zhang believes the two ideas are not actually in conflict.
“When we say trustless, we’re talking about the technology,” he said. “Blockchain allows two people who don’t know each other to transact because the rules are immutable and verifiable.”
Institutional investors are focused on a different type of trust.
“When I receive a token that represents a U.S. Treasury, I need to trust that there is truly a linkage between that token and the underlying asset,” Zhang said. “No one else should be able to touch that asset, and the ownership must be clearly protected.”
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That trust does not come purely from blockchain infrastructure. It comes from governance frameworks, legal agreements, and custody structures that ensure tokenized assets correspond to real world ownership.
For Zhang, the future of DeFi will likely combine both approaches. Blockchain technology can deliver transparency and automation, while institutional frameworks provide the legal certainty required for large scale capital.
As tokenized securities and real world assets continue to develop, the next phase of crypto may depend less on technological innovation and more on building the structures that traditional finance already expects.