Lenders show interest in the back-office capabilities of blockchain, yet ongoing security issues hinder broader acceptance.
By Olivier Acuna|Edited by Sheldon Reback Jun 3, 2026, 9:12 a.m. 2 min readMake preferred on The panel at Proof of Talk in Paris. (Olivier Acuna/CoinDesk)Key Points:
- Industry leaders assert that the true potential of DeFi lies in enhancing banks’ back-office functions, rather than speculative trading.
- However, institutional investment will remain on hold until DeFi resolves ongoing security vulnerabilities.
- According to Societe Generale, regulated banks can mitigate these issues through tokenized assets and stablecoins issued by banks, which provide the safety and custody needed by mainstream clients.
The future success of decentralized finance (DeFi) hinges on its capability to reform the back-office processes of traditional banks instead of merely offering alternative trading avenues, as stated by executives in banking and asset management.
During a discussion at the Proof of Talk conference held in Paris, executives noted that while established financial institutions are keen to integrate blockchain technology, the presence of significant security gaps, particularly in bridges connecting diverse blockchains, poses a barrier to this integration.
In April, security breaches were reported on 27 of the 30 days, leading CertiK CEO Ronghui Gu to label it as DeFi's most challenging month in four years. The Drift Protocol and Kelp Dao were among those attacked by North Korean hackers, resulting in nearly $600 million being stolen from both platforms.
Maja Vujinovic, CEO of OGroup, commented, “I don't think you see a growth in DeFi until we fix the first problem ... which is the hacks. Until we address the issues with the bridges, I don't foresee DeFi expanding beyond its current community.”
Her sentiments were echoed by Ben Nadereski, co-founder and CEO of Solstice, who stated in a CoinDesk interview that ongoing exploits are stifling DeFi's growth, attributing this issue to developers prioritizing innovation over the fundamental responsibilities of capital management.
Addressing the Challenges
Stéphanie Cabossioras, chief strategy and global policy officer at Societe Generale Forge, indicated that traditional banks are actively seeking to resolve these structural challenges.
She highlighted Societe Generale's efforts in tokenizing structured products and green bonds on public blockchains. To ensure these digital assets function effectively, SG-Forge had to enhance the cash settlement process by creating its own regulated stablecoins, like EURCV and USDCV.
“We faced limitations because only the securities component was present on the blockchain, and there was no cash component,” Cabossioras explained. “That’s why we initiated the issuance of a stablecoin.”
Cabossioras noted that institutional clients favor the security offered by regulated banks compared to open-source, non-custodial DeFi solutions.
“In daily transactions, whether for individuals or businesses of any size, there is a need for a reliable third party,” she stated. “We prefer not to keep our assets in private wallets or at home. We seek to delegate that responsibility to a trusted entity. This is why custodians and banks will continue to play a vital role.”
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Franklin Templeton says Wall Street fears blockchain because it threatens its profits
By Olivier Acuna|Edited by Omkar Godbole2 hours agoJenny Johnson, CEO of Franklin Templeton, stated that blockchain and cryptocurrency pose a threat to numerous business models currently existing in traditional finance.
Key Points:
- Jenny Johnson noted that large financial institutions are hesitant to embrace public blockchains due to the risk these technologies pose to their profitable fee-based business models that rely on transaction intermediation.
- She referenced the firm’s tokenized money market fund, Benji, to illustrate that executing transactions on public platforms like Stellar is significantly more cost-effective than...