Somewhere in a glass-walled conference room, a managing director at a legacy financial institution is explaining to a compliance team why they need to deploy on a permissionless blockchain.
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If you've been building in crypto for more than a cycle, take a moment to appreciate the absurdity — and the victory — of that sentence.
Galaxy Digital's asset management chief Steve Kurz is calling it a "great convergence" — the collision of infrastructure maturity, regulatory clarity, and institutional capital flowing into crypto.
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Meanwhile, Sui Network executives Evan Cheng and Stephen Mackintosh are reporting that institutional demand has hit levels they've never seen before, with 2025 marking what they describe as a genuine turning point.
The recent market selloff? Kurz frames it as healthy deleveraging — the kind of shakeout that clears speculative froth and leaves behind actual builders.
These are bullish signals, sure. But the story underneath the story is far more interesting than "institutions are coming." The real shift is where they're building — and why they can't easily retreat to their walled gardens once they start.
The Tokenization Trojan Horse
For years, the institutional playbook was clear: take the concept of blockchain, strip out everything that makes it interesting (permissionlessness, self-custody, censorship resistance), and rebuild it as a private, permissioned database with extra steps.
IBM's Hyperledger. JPMorgan's Quorum. Enterprise blockchain was supposed to be the "adult" version of what the cypherpunks built. That playbook failed. Spectacularly.
And now institutions are being pulled — some reluctantly, some enthusiastically — onto public, permissionless infrastructure.
The tokenization wave that Sui's leadership is describing isn't happening on private chains. It's happening on networks where anyone can validate, anyone can build, and no single entity controls the rulebook.
This matters enormously. When BlackRock tokenizes a Treasury fund on Ethereum, when institutional players explore Sui for real-world asset infrastructure, they're not just adopting a new technology.
They're accepting the premises of decentralization — composability, transparency, and open access — even if their marketing materials never use those words.
The GENIUS Act: Regulatory Catalyst or Capture?
The GENIUS Act — the stablecoin legislation making its way through Congress — is being credited as a major catalyst for this institutional surge. Sui's executives point to it directly as a driver of unprecedented demand.
And it's easy to see why: regulatory clarity, even imperfect clarity, removes the excuse that has kept risk-averse institutions on the sidelines for years.
But let's be clear-eyed about what's happening here. Stablecoin regulation is the least threatening form of crypto legislation for incumbents. It essentially blesses the dollar-denominated on-ramp to crypto while leaving the harder questions — DeFi governance, self-custody rights, privacy — for another day.
The institutions flooding in right now are comfortable precisely because this legislation doesn't challenge their existing business models. It extends them.
The optimistic read: every institution that deploys on a permissionless chain becomes a stakeholder in keeping that chain permissionless. Incentives are powerful things.
I lean toward that optimistic read, but with a caveat. We should watch closely whether institutional adoption comes with pressure to add compliance layers that effectively re-centralize these networks at the application level.
KYC-gated DeFi pools, whitelisted wallet addresses, geofenced protocols — these are the mechanisms by which permissionless infrastructure can be made functionally permissioned without changing a single line of base-layer code.
The fight for openness doesn't end when institutions show up. In some ways, it intensifies.
Agentic Commerce: The Frontier Nobody's Watching
Buried in the Sui executives' comments is a phrase worth paying attention to: agentic commerce. This is the idea that AI agents will transact autonomously on behalf of users — negotiating, purchasing, settling — and that blockchain rails are the natural infrastructure for machine-to-machine economic activity.
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Think about why this matters from a privacy and sovereignty perspective. If AI agents are going to manage portions of your economic life, the question of which rails they operate on becomes existential.
Agents running on centralized payment infrastructure — Visa, SWIFT, FedNow — are agents that can be surveilled, throttled, or shut down by intermediaries. Agents running on permissionless blockchains inherit the censorship resistance of those chains.
This is where the convergence Kurz describes gets genuinely exciting.
The intersection of AI and crypto isn't just a narrative for token speculation. It's a practical question about whether the next layer of economic automation will be open or closed, surveilled or private, permissioned or free.
The fact that institutions are exploring this frontier on public chains — rather than building proprietary agent networks — is a meaningful win for the open stack.
Healthy Deleveraging, Healthy Perspective
Kurz's framing of the recent selloff as "healthy deleveraging" deserves a nod. Every cycle, the same pattern plays out: leverage builds, prices overshoot, a correction flushes out the tourists, and the infrastructure that remains becomes the foundation for the next wave.
The builders who survived 2022 are the ones powering this institutional surge. The protocols that kept shipping through the bear market are the ones getting the phone calls from TradFi allocators now.
Short-term volatility is the price of admission for a market that's still price-discovering its role in the global financial system. The institutions arriving today understand this — or at least their risk committees have finally been convinced of it.
What they may not fully understand yet is that by choosing to build on permissionless infrastructure, they've made a choice that's harder to reverse than a quarterly allocation decision. Smart contracts don't have off switches. Composability creates dependencies. Network effects compound.
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For those of us who've been in this space because we believe in open, permissionless, censorship-resistant financial infrastructure — and not just because number-go-up — the institutional convergence is a vindication worth savoring.
They tried to build their own version. It didn't work. Now they're building on ours.
What to Watch
Base-layer integrity: As institutional volume grows, watch for governance proposals that would add permissioning at the protocol level. The base layer must stay neutral.
Application-layer compliance creep: KYC-gated pools and whitelisted addresses are coming. The question is whether permissionless alternatives remain accessible alongside them.
GENIUS Act evolution: Stablecoin legislation is step one. The real battle is over DeFi regulation, self-custody rights, and privacy-preserving technology.
Agentic infrastructure: Which chains and protocols position themselves as the settlement layer for AI agent commerce? This could be the defining use case of the next cycle.
The convergence is real. The institutions are here. And the beautiful irony is that the very infrastructure they dismissed as too radical, too risky, too uncontrolled — that's the infrastructure they now need. Welcome to the permissionless economy.
