If 2025 has taught us anything, it’s that Wall Street is finally ready to embrace crypto.
BlackRock’s ETFs keep breaking new records, Morgan Stanley is offering more crypto products with every passing week, and State Street has reported that institutions expect to double their crypto exposure by 2028. The signs are everywhere. The institutions are coming.
But crypto isn’t ready to welcome them.
One of the biggest selling points of most digital assets, such as Ethereum’s ETH and Solana’s SOL, is that holders can “deposit” their tokens to help secure the protocol. This is called “staking,” and investors receive interest for their efforts, with the rate varying by token. It’s basically a way for investors to put their crypto to work.
The problem is that as institutions start staking their crypto holdings to earn additional yield, they’ll soon realize that crypto suffers from an unacceptable lack of options for staking providers (firms that help investors stake their tokens securely). The sector, simply put, hasn’t been built to meet Wall Street standards.
If staking operators don’t adapt quickly, big financial institutions will have no choice but to keep their capital on the sidelines or take unacceptable risks, which would delay, or potentially thwart, their adoption of digital assets.
Don’t Put All of Your Eggs in Same Provider
The 2008 financial crisis made one thing clear: Relying too heavily on a single partner is dangerous. Funds that concentrated all their trading, financing and custody needs with one broker suddenly found themselves cut off when that broker failed.
The solution was to diversify. Instead of putting all of their eggs in one basket, funds spread their business across multiple prime brokers, going “multi-prime.” If one failed, the others could keep operations running.
Staking carries its own version of those dangers. That’s because locking up crypto tokens to earn yield isn’t entirely risk-free. In some cases, an investor’s holdings can be destroyed by a negligent staking provider. Staking operators are also subject to the same cybersecurity risks and software issues as regular crypto businesses.
To minimize exposure to those risks, institutions will instinctively want to apply the diversification playbook they developed after 2008. They won’t trust a single staking provider, no matter how large or well-known. They will want to multi-stake, distributing exposure across multiple operators to protect against correlated failures.
Unfortunately, the current staking ecosystem is concentrated around a handful of large providers. Big firms like Coinbase, Binance and Kraken dominate the retail field, with a few specialized operators picking up the crumbs.
For Wall Street firms, accustomed to operating in markets with dozens of counterparties to choose from, each with audited processes and robust oversight, the staking sector’s lack of depth is a massive red flag.
Staking Infrastructure Isn’t Up to Institutional Standards
Another issue is that most staking providers operate on shared cloud infrastructure. A single outage, security vulnerability or regulatory action can disrupt multiple providers at once, no matter how diversified they may appear on the surface. We saw this in October with the Amazon Web Services (AWS) problem, which took down a variety of staking providers.
So even if a firm has diversified its holdings across multiple firms, it can still suffer from a single point of failure. For institutions, this simply isn’t acceptable. They are used to managing counterparty risk at the physical infrastructure level, with clear visibility into where and how systems are run. If the bulk of staking activity depends on AWS or Google Cloud, then provider diversity is an illusion.
The only reason crypto companies even put up with this in the first place is that they don’t really have a choice without investing massively in expertise and hardware. The ideal solution would be for numerous firms to offer bare-metal staking infrastructure, meaning they’d run their software on purpose-built physical hardware rather than on the cloud. This would enable institutions to diversify their holdings not only among staking providers, but also across infrastructure, networks and location.
Crypto Has to Meet the Moment
Staking providers also face compliance issues. The Office of Foreign Assets Control (OFAC) has imposed strict sanctions against entities ranging from North Korea to drug cartels and known child exploiters. It’s the legal duty of staking providers to avoid providing financial services to such parties in any shape or form. But few operators have processes in place to ensure OFAC compliance, meaning Wall Street firms won’t be able to partner with them legally.
The crypto sector has often framed itself as a revolution in financial technology. That doesn’t mean it should ditch the basic precautions that have allowed financial institutions to manage trillions of dollars in wealth. Wall Street isn’t going to care about yield-bearing digital assets if it can’t safely collect that yield.
At this stage, resilience matters more than novelty. When it comes to crypto yields, the opportunity lies in building critical infrastructure that can support institutional needs in terms of breadth and reliability, not in creating new, flashy products. The first firms to recognize this will help define a worldwide yield ecosystem that institutions can finally trust.
Thomas Chaffee is the co-founder of GlobalStake, a carbon-negative company that delivers institutional-grade, SOC 2-compliant staking infrastructure built on bare metal.
