Key Insights into Institutional Adoption
According to Cosmos CEO, Magnus Mareneck, existing L1 infrastructure is inadequate, and crypto companies desire custom L1 chains. Fortune 500 companies, particularly financial institutions and banks, are anticipated to lead institutional adoption of cryptocurrency.
In 2025, the crypto landscape experienced a renewed surge in institutional adoption, even as the market saw a significant shift in overall skepticism from institutions towards cryptocurrency. This development represents a major milestone, with major corporate and banking entities, including BlackRock, JPMorgan, Citibank, and Fidelity, actively participating in the crypto market as prices reached new highs.
An EY report on the Institutional Investor Digital Assets Survey for 2025 indicates that institutional investors globally increased their allocations to digital assets over the past year and plan to continue doing so throughout 2025.
In an exclusive interview with The Coin Republic’s Editor-in-Chief Varuni Trivedi, Magnus Mareneck, CEO of Cosmos Labs, shared insights into the evolving trends of institutional adoption within the crypto industry. Cosmos Labs is a prominent technology stack used for developing L1 chains, and Cosmos, a separate yet closely related entity, is often referred to as the internet of blockchains.
Institutional Adoption: Moving Beyond Exposure and Investment Portfolios
Institutional adoption is crucial for the growth of the crypto market, not only by reinforcing legitimacy but also by enhancing market depth. Mareneck expressed that the new wave of institutional adoption is expected to stem from companies seeking to build their own Layer-1 blockchain solutions, as existing infrastructure often falls short for real-world integrations into established companies.
“...our impression has been that the new institutional adoption curve is going to come from basically different companies trying to build new Layer-1 blockchain because the existing infrastructure solutions don’t really serve as viable paths to build real integrations into existing companies.”
Historically, institutional adoption has primarily involved hedge funds, asset management companies, and treasury firms acquiring exposure to leading cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). However, this trend has recently evolved. For example, three of Japan's largest banks have announced joint plans to launch a Yen-pegged stablecoin, as reported by Nikkei Asia. Additionally, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) announced the integration of a shared blockchain-based ledger into its technological infrastructure.
The question arises as to why institutions would opt to build their own L1 chains when established legacy L1 chains like Bitcoin, Ethereum, and Solana already exist. The crypto analytics firm a16z, in an article, succinctly outlines the advantages of L1 chains:
“An L1 is the heaviest lift, most complicated to build, and benefits the least from the network effects of any partnership. However, an L1 also would give a fintech company the greatest control over the scalability, privacy, and user experience.”
Financial institutions and banks are seeking systems that can integrate seamlessly with their existing infrastructure, rather than adapting their operations to external platforms. This preference drives their interest in developing custom L1 chains. Mareneck highlighted the significant role of Cosmos, noting its widespread use as a stack for building L1 blockchains, and emphasized the ongoing focus on onboarding new institutions into the crypto space.
He further elaborated on the reasons companies might favor building new Layer 1 blockchains:
“...because the existing infrastructure solutions don’t really serve as viable paths to build real integrations into existing companies. So we anticipate that the majority of the things coming out of Cosmos are going to be Fortune 500 companies, major financial institutions adopting the stack to sort of come on chain and start integrating their existing businesses.”
Stablecoins and Tokenization Offer Real-World Use Cases to Banks
While Fortune 500 companies present extensive opportunities at scale through financial institutions, another largely untapped area is now being explored. Mareneck stated that they are engaging with various banks in the US and are expanding their outreach to Japan, Korea, Europe, and Latin America.
Institutions are increasingly adopting crypto for purposes beyond mere investment. Community Banks in the US serve as a notable example. At the Community Bankers conference on October 9th, 2025, Jeff Sinnott, CEO of Vantage Bank, encouraged community bankers to explore the benefits of blockchain-based systems for their core workflows.
Mareneck explained how banks are integrating blockchain into their operations, noting that banks generally show interest in two primary categories: tokenized deposits and stablecoins. Tokenized deposits, similar to stablecoins, allow banks to represent their incoming funds as tokens, facilitating better tracking within their internal systems.
According to Mareneck, stablecoins offer a distinct advantage to banks. When a bank mints its own dollar-pegged token, it can retain the yield generated, even when users transfer their stablecoin elsewhere, due to the underlying collateral.
Mareneck also discussed another area where banks can leverage blockchain: asset tokenization. He indicated that many banks, particularly large asset managers, are keen to capitalize on the liquidity advantages offered by tokenizing their company's core assets. He pointed to BlackRock's announcement of plans to tokenize its crypto Exchange Traded Funds (ETFs) and mentioned smaller-scale examples, such as tokenized real estate. He cited Revolve, a company that has launched a real estate NFT enabling the purchase of houses or fractional shares of houses.