EY And Mysten Labs Experts Discuss Strategies For Institutional Adoption Of On-Chain Assets At HSC Asset Management Fireside Chat

In Brief

The HSC Asset Management fireside chat in Hong Kong examined the challenges and opportunities for institutional adoption of digital assets, focusing on regulatory clarity, privacy, liquidity, public versus private blockchains, DeFi integration, and strategies for deploying on-chain capital at scale.

In mid-February, HSC Asset Management hosted an event in Hong Kong that brought together industry professionals to examine emerging trends and opportunities in the institutional digital asset sector. One of the day’s highlights was a panel discussion titled “From Onchain Access to Institutional Allocation.”

Moderated by Vadim Krekotin of HSC Asset Group, Paul Brody of EY, and Evan Cheng of Mysten Labs, the session explored the evolution from early onchain participation to structured institutional investment. Key topics included regulatory clarity, the development of robust infrastructure, and the operational frameworks necessary to support the deployment of large-scale capital.

The discussion opened with the question of what prevents institutions from deploying significant capital on-chain. Panelists noted that while foundational elements such as tokenization, stablecoins, exchanges, and regulatory frameworks are largely in place, the challenge lies in integrating these components into cohesive, configurable systems. A central concern is determining which assets institutions actually want to purchase on-chain and understanding the regulatory constraints that govern their allocation. For instance, pension funds and sovereign wealth funds face limits on alternative investments, creating a need for standardized assets with verified performance histories to enable broader on-chain deployment.

Privacy, Confidentiality, And Configurability

The panel placed particular emphasis on privacy and confidentiality as critical factors in blockchain adoption. Experts explained that enterprise systems must be neither fully public nor fully private but should be configurable to meet the requirements of multiple participants. Solutions must allow private transactions while settling results on-chain, enabling institutions to control risk, maintain efficiency, and monitor exposures. Zero-knowledge rollups and other privacy-enhancing technologies were highlighted as essential tools that have made large-scale confidential on-chain transactions feasible, addressing challenges that have persisted for nearly a decade.

Liquidity And On-Chain Ecosystem Development

Liquidity was identified as a key barrier to institutional adoption. Even as privacy solutions advance, fragmented liquidity across chains, venues, and asset types continues to complicate trading and integration. Panelists argued that a fully integrated on-chain ecosystem—where assets settle rapidly and can be used as collateral or borrowed against—offers a distinct advantage over traditional off-chain systems. Efforts to achieve parity between off-chain and on-chain assets are considered essential to unlocking the full potential of blockchain for institutional investors.

Public vs. Private Blockchains

The discussion also examined whether public blockchains can function as institutional infrastructure. Panelists suggested that public, permissionless chains provide greater innovation, security, and efficiency compared to private alternatives, which often deliver limited value relative to conventional IT systems. Historical comparisons to the early internet underscored that private infrastructure tends to be restrictive, while open, configurable public blockchains enable scalable, automated financial operations.

DeFi, Risk, And Accountability

Panelists explored the role of decentralized finance (DeFi) for institutional adoption, noting that while DeFi can generate incremental yield and operational efficiency, institutions are likely to adopt it cautiously, after extensive testing. Responsibility within on-chain systems remains complex due to fragmentation, emphasizing the importance of hybrid models that combine self-custody with layered safeguards such as insurance and structured controls.

Looking Ahead: Institutional On-Chain Strategy

The panel concluded with guidance for institutions considering on-chain engagement: begin with small-scale asset deployments to build operational experience, learn from initial implementations, and prepare for broader automation in asset management. Blockchain is increasingly seen as a critical layer for fully automated financial systems, and organizations that do not engage risk falling behind as the technology evolves.