As the world of finance continues to evolve, a growing number of banks and fintech companies are diving headfirst into decentralized finance (DeFi), eager to integrate its innovative capabilities into their existing frameworks. This trend, identified by blockchain development firm Alchemy, signals a significant shift towards merging traditional finance (TradFi) with DeFi solutions, creating a seamless experience for users who might be completely unaware of the complex operations occurring behind the scenes.
Tradition Meets Innovation
Alchemy, often likened to the “AWS of crypto” for its developer-centric blockchain tools, reports that major financial players like Fidelity, JPMorgan, Goldman Sachs, Revolut, and Robinhood are exploring ways to blend DeFi functionalities with their conventional service offerings. Guillaume Poncin, Alchemy’s CTO, describes this approach with a term gaining traction in the industry: the “DeFi mullet”—business in the front, DeFi in the back.
Poncin elaborates, “These firms are at various stages of harnessing DeFi’s potential. The aim is to enable their users to leverage their existing funds, like USD or other fiat currencies, through DeFi tools without the users needing to grapple with the complexities of smart contracts.”
A New Frontier in Lending
A practical illustration of this integration is seen in how Coinbase provides loans against locked bitcoin holdings. Such services, traditionally inaccessible to retail investors, are now within reach, thanks to DeFi’s capabilities. Poncin speculates that companies like Fidelity could soon offer similar margin loans linked to money-market fund accounts. “Imagine obtaining a loan against your Vanguard holdings with just a click,” he suggests. This vision underscores the potential for DeFi to revolutionize asset management by simplifying access to complex financial instruments. As explored in Bitcoin DeFi Is Taking Root on Sui—Here’s How It Works, the expansion of DeFi into Bitcoin ecosystems is further evidence of this transformative potential.
The implementation of DeFi underpinnings also opens doors for fintechs to tokenize various assets, offering users enhanced utility. “Whether it’s money-market funds or private equity, the goal is to provide users with tangible benefits through DeFi,” Poncin asserts.
The Invisible Wallet Revolution
Alchemy’s five-year journey in the blockchain space has equipped it with the expertise to offer robust, user-friendly solutions. The company’s APIs—those unsung heroes of software integration—enable seamless data indexing, smart contract automation, and intuitive wallet functionalities that operate invisibly to end users.
“The old method of using blockchain wallets required tools like Metamask, which could be quite daunting for the average user,” Poncin notes. “Today, brands like Nike or Stripe can offer crypto wallets that are completely invisible to the user—hidden under-the-hood yet fully functional.” This follows a pattern of innovation similar to the launch of Bitcoin DeFi Project Elastos Debuts BTC-Backed Stablecoin BTCD, which highlights the ongoing evolution of user-friendly DeFi solutions.
The Road Ahead
As financial giants continue to explore and implement DeFi’s potential, questions linger about the long-term sustainability and regulatory landscape. With President Trump’s administration previously signaling favorable crypto regulations, it’s unclear how future policies might shape this burgeoning intersection of TradFi and DeFi.
This momentum towards a DeFi-infused financial system suggests a transformative period ahead, yet it remains to be seen how these innovations will be received by both regulators and the broader market. The integration of DeFi technologies by established financial entities could reshape the financial ecosystem, albeit with challenges that need careful navigation.
In this rapidly evolving landscape, one thing is certain: the marriage of DeFi and TradFi is not just a fleeting experiment but a substantial shift that could redefine how we think about finance. As the industry adapts, the implications of this transformation will continue to unfold, raising questions and opportunities for all involved.
Source
This article is based on: Every Bank and Fintech Wants DeFi Under the Hood: Alchemy
Further Reading
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
