In 2025, the cryptocurrency industry entered a new phase, characterized by a surge in institutional participation. After years of caution and skepticism, large firms are now allocating meaningful capital to digital assets.
But what changed for institutions to finally turn to an industry they once kept at arm’s length? BeInCrypto spoke with Aishwary Gupta, global head of Payments and Real-World Assets at Polygon Labs, to unpack the drivers behind this transformation. Gupta discusses why institutional inflows now dominate the market and what this shift means.
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Institutions Now Dominate Crypto Inflows: Here’s Why
Gupta noted that institutions now account for an estimated 95% of crypto inflows. Meanwhile, retail participation has fallen to roughly 5–6%. This reversal marks a shift from the hype-driven, retail-led cycles of previous years to a market increasingly shaped by structured finance.
Large asset managers, including BlackRock, Apollo, and Hamilton Lane, have begun allocating around 1–2% of their portfolios to crypto, introducing ETFs and piloting tokenized investment products on-chain.
According to Gupta, the change isn’t in Wall Street’s sentiment but in the infrastructure that now supports institutional activity. He cited Polygon as an example:
Gupta said institutions are entering the crypto space from two primary directions. The search for yield and diversification, and the pursuit of operational efficiency. The first wave focused on dollar-denominated returns through products such as tokenized treasuries and bank-managed staking. This offered a familiar and compliant framework for generating yield.
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The second wave, he explained, is driven by the efficiency gains that blockchain can provide. Faster settlement, shared liquidity, and programmable assets have encouraged large financial networks and fintech firms to experiment with tokenized fund structures and on-chain transfers.
Retail Retreat Raises Questions About Crypto’s Direction as Institutions Take the Lead
The executive also emphasized the reason for the retail exit. He highlighted that retail investors left the market largely due to losses tied to speculative meme coin cycles and unrealistic profit expectations. This erosion of trust, he noted, pushed many smaller investors to the sidelines. However, he does not view this as a permanent or structural departure.
Still, the rise of institutional participation raised concerns about potential dilution of crypto’s decentralization ethos. Gupta contends that maturity and decentralization are not mutually exclusive if public, open networks remain the foundation.
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According to him, decentralization is threatened only when networks sacrifice openness, not when new participants enter.
When asked whether institutional dominance could slow innovation by prioritizing compliance over experimentation, Gupta acknowledged the tension. Nonetheless, he argued that it may ultimately benefit the sector.
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What Comes Next as Institutions Deepen Their Presence in Crypto
Looking ahead, Gupta said the rise of institutional participation should not be viewed as Wall Street “taking over” crypto but rather joining an increasingly multifaceted ecosystem.
He expects significant expansion in real-world asset (RWA) tokenization and a gradual increase in market stability as trading activity becomes more disciplined and less speculative. Stronger regulatory integration, he added, is also likely as traditional financial players continue to develop on-chain strategies.
Gupta anticipates further growth in institutional staking and yield-generating networks as regulated entities explore compliant ways to participate in on-chain yield. At the same time, he believes interoperability will become a central focus, with public-chain tools that enable seamless movement of assets across different rollups gaining importance as institutions scale their activity.
Source: https://beincrypto.com/institutional-crypto-shift-polygon-insights/
