DeFi won't win over big banks until it fixes its hacking problem, executives say
Executives said DeFi will stay niche for institutions until security failures, especially bridge hacks, are addressed. They argued banks want blockchain for back-office use, not speculation.
Intelligence analysis by GPT-5.4 Mini
At Proof of Talk in Paris, banking and asset-management executives framed DeFi's main promise as infrastructure for traditional finance, not a new trading venue. Their main objection was security: repeated exploits, especially bridge failures, are keeping institutional money away.
The story says banks may like blockchain, but they will not use it much if thieves keep breaking in. It is like a shiny new store with a broken lock: useful things are inside, but people will not trust it until the door is fixed.
Analysis
Institutions want utility, not just trading
Executives on a panel at Proof of Talk in Paris said DeFi's long-term value is in helping banks modernize back-office operations, rather than in creating another speculative market. Their view was that legacy financial firms are interested in blockchain, but only if the security model is strong enough to support real money and regulated workflows.
Security is the gatekeeper
The clearest barrier they identified was onchain security, with bridges singled out as a major weak point. The article says breaches were reported in 27 of 30 days in April, and it cites CertiK CEO Ronghui Gu calling it DeFi's worst month in four years. It also says Drift Protocol and Kelp Dao were hacked by North Korean cybercriminals in exploits that drained nearly $600 million.
Maja Vujinovic of OGroup said DeFi will not see growth until "the hacks" are fixed, and she said bridge security is an "absolute problem" that blocks broader adoption. Ben Nadereski of Solstice echoed that view, saying the pace of innovation has outstripped attention to capital management and core operational responsibility.
What banks are doing instead
Stéphanie Cabossioras of Societe Generale Forge said banks are already trying to solve the plumbing problem from inside the regulated system. She pointed to tokenized structured products and green bonds on public blockchains, and said the firm had to add a cash settlement layer by issuing regulated stablecoins such as EURCV and USDCV.
Her broader point was that institutional clients still prefer a trusted custodian or bank over open-source, non-custodial protocols. In this framing, DeFi may matter most when it becomes safer and more compatible with the controls, custody, and settlement needs of mainstream finance.
Key points
- Executives at Proof of Talk said DeFi's main value is in banking infrastructure, not speculative trading.
- They argued security failures, especially bridge exploits, are the main reason institutions are not adopting DeFi faster.
- The article cites April as a severe month for DeFi security, with breaches on 27 of 30 days and major losses from hacks.
- Societe Generale Forge said it is using tokenized assets and regulated stablecoins to make blockchain settlement work for banks.
- Institutional clients, the panel said, still prefer trusted custodians over open, non-custodial DeFi protocols.
If DeFi teams improve security, especially around bridges and other weak points, banks may become more willing to use blockchain for settlement and back-office work. The article also shows regulated stablecoins and tokenized assets already being used as a practical bridge into institutional finance.
If hacks keep happening, institutional capital is likely to stay on the sidelines and DeFi may remain mostly a crypto-native niche. The article suggests that even interested banks will avoid open protocols if they cannot get the safety and custody standards they need.
