Central financial district, Hong Kong, China.
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Institutional capital is no longer circling crypto. It is being deployed.
More than $1 billion flowed into spot bitcoin ETFs in a single week this April. Stablecoins now account for over $300 billion in circulating supply. Tokenized treasuries and other real-world assets are approaching $30 billion onchain.
Individually, these are milestones. Taken together, they point to something more structural. Parts of the financial system are already being rebuilt on digital rails.
John Cahill, COO of Galaxy Digital APAC, sees that shift as largely settled.
“I think we won,” he says. “Winning for crypto was earning a seat at the asset allocation table.”
From Access to Integration
The first phase of institutional adoption was about access.
Bitcoin moved from a fringe asset to one that could be held through regulated vehicles. The rapid scaling of spot ETFs made exposure operationally simple for asset managers, private banks and wealth platforms. Allocation, not education, became the focus.
“Bitcoin’s in the conversation,” Cahill says. “You can allocate zero, and that’s a perfectly acceptable option. But it’s an option now.”
That shift matters because once an asset is included in portfolio construction, it becomes part of the system. The debate moves from legitimacy to sizing.
What follows access is integration. That is where the current phase is unfolding.
Institutions are not only allocating capital. They are beginning to adapt how capital moves, settles and is managed across different markets.
The Infrastructure Layer is Scaling
Beneath the headline products, a second layer of growth is taking shape.
Stablecoins have expanded into a system exceeding $300 billion. Their role has evolved from trading collateral to a functional layer for payments, settlement and cross-border transfers. Payment activity tied to stablecoins is now estimated to be running at an annualized rate in the hundreds of billions.
At the same time, tokenization is moving into more familiar instruments. Money market funds, government bonds and private credit are increasingly being issued or mirrored onchain.
“The story around the industry now is really about plumbing,” Cahill says. “Moving from traditional settlement rails to something more efficient.”
This shift challenges some of the basic assumptions of financial infrastructure. Settlement cycles that take days can be reduced to minutes. Reconciliation processes can be automated. Transparency is embedded at the ledger level rather than layered on through reporting.
Much of this remains in development. Interoperability between networks, custody standards and user interfaces still need refinement. But the direction is clear. The focus is shifting from assets to systems.
Policy Is Becoming the Gatekeeper
If infrastructure is the foundation, policy is the constraint that determines how quickly it can scale.
Across jurisdictions, the regulatory conversation has moved from whether digital assets should exist to how they should operate within existing financial frameworks.
That transition is uneven. In the United States, market structure legislation and stablecoin rules remain under debate. In Europe, the MiCA regime has introduced clearer guardrails, though implementation continues to evolve. In Asia and the Middle East, regulators have taken a more iterative approach, combining licensing, sandbox programs and phased rollouts.
Cahill sees regulation as a necessary condition for institutional participation.
“We’re quite pro-regulation,” he says. “It enables the industry to grow. It enables ecosystems to develop.”
The emphasis, however, is not just on oversight but on usability.
“It has to be commercially viable,” he says. “If you don’t have that, you won’t get long-term capital and you won’t get entrepreneurs building.”
This tension between control and competitiveness is becoming a defining feature of the market. Too little clarity limits participation. Too much rigidity can push activity elsewhere.
Increasingly, jurisdictions are competing not just on rules, but on how workable those rules are in practice.
Hong Kong’s Second Act
That dynamic is particularly visible in Hong Kong.
The city has reemerged as a focal point for digital asset policy in Asia, building on its role as a traditional financial hub. Over the past two years, authorities have introduced licensing regimes for trading platforms, supported tokenized bond issuance and engaged directly with industry groups on market structure.
The Hong Kong government has issued multiple rounds of tokenized bonds, including a HK$6 billion multi-currency issuance in 2024. Regulators have expanded oversight of virtual asset platforms and are exploring frameworks for derivatives and liquidity provision.
At the same time, initiatives such as the HKMA’s work on tokenized deposits are beginning to test how blockchain-based systems can integrate with banking infrastructure.
Cahill, who has spent more than two decades in Hong Kong, describes the approach as collaborative.
“It’s very engaged,” he says. “From the government side and the regulatory side, there’s a real effort to build something that works.”
That includes working through practical challenges such as licensing timelines, capital requirements and cross-border coordination. Progress has been gradual, but consistent.
“Every region is different,” Cahill says. “There are nuances that you’ve got to pay attention to. If you can navigate that, the opportunities will be there.”
For firms operating across multiple jurisdictions, those nuances are not a side consideration. They are a core part of strategy.
Building the Institutional Stack
As policy frameworks take shape, institutions are expanding their role beyond participation into infrastructure.
Banks, asset managers and trading firms are approaching digital assets from different angles. Private banks are responding to client demand. Trading firms are building liquidity and derivatives capabilities. Asset managers are experimenting with tokenized products and portfolio construction.
For firms like Galaxy, the strategy is to operate across these layers.
The company’s model combines trading, asset management and advisory services, with a focus on connecting traditional financial systems with blockchain-based infrastructure.
“We have a lot of experience from traditional markets,” Cahill says. “A lot of that is transferable into building any kind of marketplace.”
That experience is particularly relevant in areas such as risk management, market making and client servicing. As digital asset markets mature, those functions become more important, not less.
The shift is also visible in how products are evolving. Stablecoins represent the most basic form of tokenized money. From there, the market is moving into yield-bearing instruments, tokenized funds and more complex structures.
Over time, these components begin to resemble a familiar architecture, rebuilt on different rails.
A System In Transition
What emerges from these trends is not a single inflection point, but a gradual convergence.
Digital assets are no longer isolated from the broader financial system. They are being integrated into it, piece by piece, through products, infrastructure and policy.
“The institutions aren’t coming,” Cahill says. “They’re here.”
That presence is not uniform. Some firms are still in exploratory phases. Others are building at scale. Many are somewhere in between.
What is changing is the baseline assumption. Digital asset exposure, onchain settlement and tokenized products are no longer hypothetical. They are operational in parts of the system today.
For policymakers, the challenge is to create frameworks that support that evolution without introducing systemic risk. For institutions, the challenge is to adapt existing models to new infrastructure.
For markets, the result is a period of transition.
Where It Goes From Here
The next phase is likely to be defined less by new assets and more by integration.
Tokenized money, tokenized securities and blockchain-based settlement systems are beginning to intersect. As those layers connect, the distinction between digital and traditional finance becomes less meaningful.
Cahill frames this as a long-term build rather than a short-term cycle.
“This is about building the foundations,” he says.
In that sense, the most important developments may not be the most visible ones. They are the systems being put in place behind the scenes, shaping how capital moves across markets.
The transition to a digital financial system is no longer a question of if.
It is a question of how it is implemented, and where that implementation happens first.