(Kitco News) – The adoption of digital assets is steadily increasing, with pension funds recently announcing new allocations to Bitcoin (BTC) and Ethereum (ETH), but the 2022 collapse of exchanges like FTX and crypto lending platforms like Celsius and BlockFi continues to be a sore spot for the industry that many are hoping will be rectified during the current bull market cycle.
To get an update on the state of crypto lending as the sector looks to bounce back, Kitco Crypto spoke with Joe Flanagan, co-founder of Maple Finance, to get an industry perspective.
When asked if there is still a high demand for crypto lending platforms, Flanagan replied in the affirmative and, in a healthy sign for the industry, noted that traders are utilizing leverage less.
“Yes, demand for crypto lending is growing as market activity returns, but leverage remains more limited than in previous cycles,” he said. “Maple’s growth over the last 12 months shows increasing demand from institutions seeking to borrow capital and from lenders looking to earn quality yields through transparent decentralized finance (DeFi) markets. We expect this demand to accelerate throughout 2025.”
Touching on the increasingly prominent role institutions are having on the crypto market, Flanagan said, “Institutions are key to expanding the crypto economy. Providing them with capital drives the growth of their businesses and the broader crypto ecosystem. Maple facilitates this flow of capital while maintaining strict risk management.”
Regarding risk management, which was sorely lacking in 2022, Flanagan said the best way to keep firms honest is for them to provide updated information regarding their books.
“Transparency is crucial. Lenders are no longer willing to allocate capital into the ‘black holes’ of CeFi platforms,” he said, adding that Maple’s technology “enables real-time transparency for all lenders, allowing them to see where their capital is allocated, the terms of the loan, and the collateral securing it.”
“This removes reliance on ‘trusted’ intermediaries, enabling lenders to rely on Maple’s platform, which has issued over $5 billion in loans to date,” he noted.
Flanagan said the collapses that roiled the crypto market in 2022 were “primarily due to overextension of credit based on trust rather than verifiable collateral.”
“By utilizing DeFi and platforms like Maple, lenders can allocate capital with full knowledge of how it's being deployed and the collateral that backs it,” he underscored. “Maple only issues fully collateralized loans to leading institutions in crypto, combining advanced DeFi technology with capital markets expertise to maintain its position as DeFi’s institutional lender.”
Looking forward to the future of crypto lending, Flanagan said the industry is primed for massive growth “as more assets become tokenized on-chain.”
“Many brilliant founders are working to solve the problem of tokenizing Real World Assets (RWAs), but tokenization alone doesn’t create utility—that utility has to be built,” he said. “Maple’s established technology and institutional expertise enable it to facilitate lending markets across any tokenized assets. As more assets become tokenized, Maple aims to create new lending markets and replace existing ones with global access, full transparency, and real-time efficiency.”
And with the RWA market rapidly growing, Flanagan said the future is bright for decentralized finance as tokenized assets are set to introduce billions of dollars worth of assets into the DeFi ecosystem.
“Lending is currently the backbone of DeFi, and its role will only grow as the sector expands,” he said. “Platforms like Aave, Maker, and Spark provide robust retail-focused money market lending. Maple, however, offers a differentiated product as DeFi’s institutional lender. With more sophisticated capital entering the DeFi space in 2025 and beyond, Maple is well-positioned to” help facilitate continued growth.
Last week, it was reported that a UK pension fund has become the first in the country to allocate towards Bitcoin, putting 3% of its assets under management into Bitcoin exchange-traded funds (ETFs). And according to a 13-F disclosure filed on Monday with the Securities and Exchange Commission, the State of Michigan Retirement System, which oversees $13.6 billion in pension fund assets, added to its crypto exposure with the purchase of $10 million shares worth of Grayscale’s Ethereum Trust (ETHE).
These are but the latest developments highlighting the growing role institutions are playing in the crypto market, and according to Tim Ogilvie, Global Head of Institutional at Kraken, “Cryptocurrencies – starting with Bitcoin, and now moving into Ethereum – have become cornerstones of a well-balanced portfolio.”
“Milestones like [these] highlight the steady trend toward investor allocation into the asset class,” he said. “While we are still very early in the institutional adoption of digital assets, this trend toward having at least some allocation in crypto is likely to accelerate as institutions try to capture the performance pioneering funds seize.”
“It’s important to remember that Ethereum did not enter the institutional market with the same brand and established thesis as Bitcoin, and institutions should be applauded for their commitment to understanding the investment thesis of Ethereum,” he added. “Long-term, this could open the door to the wider universe of cryptocurrencies, including smart contract platforms and infrastructure layers that have vast utility for global applications and digital economies.”
These developments also point to a positive future for tokenized assets, as Ethereum is the top platform for DeFi and RWA, with adoption expected to continue in the future.
“The trend for tokenization remains firmly in place, with institutions such as Visa investing in tokenization rails and traditional financial institutions such as BlackRock, Fidelity, and Franklin Templeton launching their own tokenized investment products,” analysts at Sygnum said in their latest Quarterly Investment Outlook. “Central banks and regulators are also encouraging innovation with sandbox environments and interbank use cases.”
“Despite the start of the US rate cut cycle, the tokenized treasury market continues to grow,” they added. “This is also supported by the rising activity in tokenized bonds and money market funds from Franklin Templeton, Fidelity, Janus Henderson, and Credit Agricole’s subsidiary CACEIS.”
These factors combined suggest that the crypto lending market is set to improve its tarnished image from 2022 and see tremendous growth moving forward as greater transparency and improved risk management, combined with tokenized real-world assets that the public is more familiar with, set the stage for a new era of crypto finance.
