Crypto lending may be a $60–$80 billion market today - tiny compared to the trillions in global credit - but it is increasingly being built on the same foundations of trust, structure and discipline that have long defined traditional finance. The panelists agreed that scaling this market will depend as much if not more on solidifying these decade old principles, as it will on technological innovation.
“Digital assets are such an innovative space, but the sensible business practices in lending are completely tried and tested - we’re not learning new lessons here.”
Justin Davda, Coinbase
Across the discussion, speakers emphasized that the industry’s credibility will come from familiarity and time tested reliability. Matthew DeCicco (Cantor) described the industry as being “on the precipice of broader institutional comfort” with Cantor making a deliberate effort to offer digital credit products operationally similar to the repo and securities-finance markets where most investors already operate. This return to tried-and-tested discipline highlights a maturing market that values stability over novelty and risk calibration over rapid growth.
However, the panelists agreed that we are still at the start of this evolution, with Matthew acknowledging that “there’s still a fair bit of work that needs to be done to get more traditional pools of capital comfortable with lending against digital assets, which is why we’ve intentionally built a product that is really exclusive to Bitcoin.”
The borrower landscape in crypto credit has transformed. Institutional demand that was once limited to proprietary trading desks now spans market makers, exchanges, corporates, and funds seeking structured liquidity solutions. Retail participation remains, but institutions now dominate borrowing volumes, driven by the need to unlock balance-sheet efficiency and treasury management flexibility.
“As of the last quarter, we’re well over a billion dollars in loans outstanding to really every customer segment in the space, whether it’s market makers, VCs, corporates, hedge funds, asset managers, high net worths.
Justin Davda, Coinbase
This diversification is reshaping the economics of lending. Institutional borrowers are less focused on yield and more on operational integration using digital credit to finance trading, hedging, and short-term funding needs. High-net-worth individuals and business owners, meanwhile, are borrowing against long-term Bitcoin holdings to free up capital without liquidating assets, a model that mirrors traditional private banking.
Dhruv Patel (Arch Lending) also noted that demand is also emerging from mid-sized enterprises and traditional industries, including sectors like manufacturing and irrigation, where companies hold Bitcoin on their balance sheets but need fiat financing to expand operations or invest in growth. This evolution signals that crypto credit is no longer a niche product - it’s becoming a practical financing tool for real-world business activity.
While interest-rate convergence with traditional markets remains a work in progress – with Max estimating a "2 to 5 year timeline to close the gap", – panelists agreed that professionalization is accelerating. Transparent risk reporting, standardized documentation, and 24/7 collateral management are turning crypto lending into an efficient and disciplined liquidity layer rather than a speculative side market.
As digital credit expands, collateral frameworks are evolving to blend traditional credit discipline with on-chain transparency. The industry now balances risk management against innovation and yield using data, liquidity analytics, and market depth to calibrate exposure.
“We don’t lend more than 10% of a token’s average daily trading volume. Then we stress-test every haircut back to March 2020 to calibrate LTVs.”
Max Bareiss, Galaxy Digital
This quantitative approach ensures lending decisions are grounded in liquidity, not sentiment. By tying LTVs to volatility data and historic stress events, lenders can model downside risk precisely and avoid forced liquidations. For most, that discipline has meant a deliberately narrow collateral universe.
While diversification remains the long-term goal, Bitcoin and Ethereum backed loans continue to anchor institutional credit. Many lenders intentionally start here by offering products supported by high-liquidity assets to help traditional allocators build comfort and trust, however appetite is rising for an expanded set of collateral.
While still a small share of the crypto market, tokenized treasuries and funds are rapidly emerging as the next frontier, with a market cap of $8.72 billion as of October 2025 - an 8× increase in just 20 months, up from $1 billion in April 2024. Their long-term success, however, hinges on transparent pricing, regulated custody, and mature reporting frameworks . As this transition unfolds, tools like Cryptio’s loan management suite help lenders track collateral and LTVs with institutional precision, strengthening the bridge between digital and traditional credit systems.
Behind the growth of institutional credit lies a network of strategic partnerships between crypto-native lenders, and traditional financial institutions connected to on-chain protocols and liquidity pools. This collaboration is redefining how capital flows across asset classes and platforms.
“We’re talking to the largest capital pools - banks, insurers, asset managers—to participate in structures they already know. That helps us lower our cost of capital and rates overall.”
Dhruv Patel, Arch Lending
These partnerships are reshaping market plumbing. Firms like Cantor Fitzgerald are structuring digital lending to mirror traditional repo facilities, while others, like Galaxy, are bridging on-chain and off-chain liquidity through automated routing and custody integration.
”We have the operational process to take the Bitcoin, go somewhere like a Coinbase, wrap the Bitcoin and put it on chain. A number of traditional financial institutions coming into the market don’t have that operational know how to do that. In addition to that, they can’t manage auto liquidations, which is definitely something that’s very prevalent in on-chain markets. The goal is not to replace traditional finance but to connect it seamlessly to blockchain-based markets allowing institutions to access DeFi yields through familiar compliance and governance frameworks.”
Max Bareiss, Galaxy Digital
This convergence requires coordination across technology, legal, and regulatory fronts. Panelists noted that 24/7 collateral mobility, unified audit trails, and secure data pipelines are essential to institutionalise crypto credit at scale. The integration challenge remains significant but the direction of travel is unmistakable.
The discussion closed on a forward-looking note. The consensus was clear: crypto lending is evolving into institutional infrastructure, underpinned by professional governance, interoperability, and risk transparency.
Institutions today expect end-to-end, white-glove experiences - secure custody, integrated financing, verified DeFi access, and on-chain wallets - all within a single, regulated environment. Leading platforms are responding with unified systems that blend the composability of crypto with the operational rigor of traditional finance.
“There's a number of institutions that cannot face defi, whether it's because they're not set up from an operational standpoint or regulatory. They just don't want to interact with any of the on chain pools. We can create that white glove service and really access the defi market to the masses”
Max Bareiss, Galaxy Digital
This evolution is reshaping market confidence. As standardized frameworks, verified liquidity pools, and institutional-grade custody converge, digital credit is graduating from an alternative product into a foundational component of modern capital markets. The guardrails are now in place for the next phase: scalable, compliant, and continuous finance.
Cryptio is the leading financial data platform for crypto accounting, tokenization compliance, and institutional lending. Trusted by over 450 organizations - including public companies like Circle, Exodus, and Semler Scientific - Cryptio provides the enterprise-grade data infrastructure that bridges on-chain activity with GAAP- and IFRS-ready reporting.
Book a demo to see how Cryptio helps institutions build financial integrity at scale.