Cryptocurrency Adoption by Institutions: The Necessity of Transitioning from Wallets to Accounts
In the rapidly evolving world of blockchain and digital assets, financial institutions are actively addressing the shift from account-based to wallet-based systems. This transition, championed by Ava Labs President John Wu, is essential for institutions aiming to position themselves for the next era of financial services.
Key developments in this shift include:
- Institutional Wallet Adoption Growth: The past year has seen a significant increase in institutional wallet ownership, with a 51% year-over-year growth in 2025. Wallets are no longer just a tool for retail users; they are evolving into dynamic financial platforms supporting multi-chain access, AI-enhanced security, and integrations with traditional payment methods.
- Tokenized Cash and Stablecoin Infrastructures: Major financial institutions like JPMorgan, Citibank, Goldman Sachs, and UBS are experimenting with tokenized bank deposits and stablecoin cash for real-time on-chain settlement between institutional clients. This enables faster liquidity management, cross-border payments, and interbank transactions on blockchain networks.
- Cross-border and Central Bank Digital Currency (CBDC) Projects: Collaborative initiatives like Project Guardian, Project mBridge, and Project Helvetia involve central banks and major international banks to explore tokenized digital cash and assets on blockchains, driving wallet and token integration for instant settlement and new financial products.
- Enhanced Transparency, Efficiency, and Security: Wallet-based systems bring improved transparency through immutable ledger records, reduced intermediaries, and real-time settlement, which improve auditability and compliance. Institutions are leveraging wallet technologies integrated with AI fraud detection and secure multi-signature custody to address risks and regulatory demands.
- Regulatory Clarity and Institutional Momentum: Regulatory frameworks, like the US CLARITY Act and executive orders, have legitimized institutional crypto custody and wallet usage, enabling crypto-backed products to be offered by banks and asset managers with custody solutions tailored for wallet-based asset holding.
However, financial institutions face challenges in navigating interoperability between blockchain wallets and legacy systems, compliance with evolving legal frameworks for tokenized assets, and liquidity management in secondary markets while piloting wallet-centric tokenized finance solutions.
John Wu emphasizes that this shift not only concerns infrastructure but also requires a change in mindset. The reluctance to change mindsets in financial services is a significant barrier to innovation in blockchain and digital assets. The future of finance won't be defined by the number of APIs between old and new systems; instead, it will be defined by those willing to adopt a wallet-based mentality and build for a user-centric world.
In a wallet-based world, value and ownership are composable and portable, potentially leading to streamlined operations, lower overheads, and enhanced client trust. The user will be the platform in the future of finance, with the wallet serving as their gateway to the entire blockchain ecosystem, offering a new mental model for managing digital assets. Institutions should stop thinking about accounts to be managed and start thinking about assets to be owned. The need to break down silos for digital assets is crucial for fully realizing the promise of crypto.
- Financial institutions, such as JPMorgan and Goldman Sachs, are venturing into stablecoin infrastructures and tokenized bank deposits, using them for real-time on-chain settlement between institutional clients, thereby enhancing liquidity management and cross-border payments.
- Ava Labs President John Wu advocates that the shift from account-based to wallet-based systems in finance is not merely about technology but also necessitates a change in mindset, as the reluctance to adapt could be a barrier to innovation in the blockchain and digital assets sector.
- As digital assets become more prominent, wallets are evolving to serve as dynamic financial platforms, supporting multi-chain access, AI-enhanced security, and integrations with traditional payment methods, catering to both retail and institutional users.
- Central banks and international banks are collaborating on projects like Project Guardian and Project Helvetia to explore tokenized digital cash and assets on blockchains, aiming to integrate wallets and tokens for instant settlement and the creation of new financial products.
