Institutions may be tempted by DeFi products should the Federal Reserve take the wind out of traditional financial product yields this year.
An anticipated Federal Reserve interest rate cut in the United States could renew major institutions’ interest in decentralized finance (DeFi) and stablecoins — as long as the infrastructure develops further this year, says asset manager Fidelity.
In its 2024 Digital Assets Look Ahead report released Jan. 13, Fidelity said while it expected institutions to dive into DeFi for their yields last year, this didn’t end up happening as Fed rate hikes pushed them to move into "perceived to be safer,” traditional fixed-income products.
DeFi platforms have previously been regarded as having hard-to-use interfaces and have been perceived as being susceptible to hacks and exploits — which have caused institutions to “scrutinize the risks associated with smart contracts.”
