Foreign media report that as the digital assets market matures, the future infrastructure of the crypto industry may become more akin to traditional financial markets rather than continuing to emphasize decentralization alone. David Mercer, CEO of LMAX Group, told CoinDesk that for the industry to attract larger volumes of institutional capital, it must address long-neglected areas such as credit, clearing, and collateral management.
Centralization first addresses liquidity.
Mercer believes that centralized market structures first address the issue of liquidity coordination. By concentrating buyers and sellers in a single market, it becomes easier to develop deeper liquidity and more transparent price discovery. Even in markets that emphasize decentralization, participants ultimately rely on trusted trading venues, governance arrangements, and settlement mechanisms during periods of heightened volatility or risk events.
Credit and clearing are still lacking.
He noted that foreign exchange and capital markets operate efficiently not merely because of trading matching systems, but more importantly due to the extensive network of credit relationships, clearing brokers, and prime brokers behind them. When LMAX launched its institutional digital assets platform, LMAX Digital, in 2018, it anticipated that a similar infrastructure would quickly emerge in the crypto market—but eight years later, this layer remains significantly underdeveloped.
Mercer believes that the immediate settlement and on-chain transparent records brought by blockchain do offer real value, but this alone is insufficient to support global capital markets. This is because the real-world financial system still relies on leverage and credit, and institutional capital typically requires this infrastructure to expand its allocations.
Stablecoins or improved collateral liquidity
In his view, a more pressing issue is the inability of collateral to flow efficiently between the traditional financial system and the digital assets ecosystem. Many institutions still operate in isolated regulatory and operational environments, where traditional assets, digital assets, and stablecoins often remain trapped in separate systems, making it difficult to allocate funds freely—directly reducing capital efficiency.
Mercer cited the market volatility in the first quarter of this year as an example, noting that investors shifted positions between stocks, gold, and Bitcoin. However, if funds or fiat collateral are pre-deposited on a centralized platform, they often cannot be quickly transferred to other markets when opportunities arise. This fragmentation limits the depth of institutional participation.
He believes that stablecoins and tokenized assets could ultimately improve this issue. If collateral in digital currency form can be used across markets, institutions would see significantly improved efficiency in payments, settlement, and liquidity management.
Institutions place greater emphasis on custody conditions.
Mercer also noted that during conversations with asset management firms this year, only about 20% of respondents expected to directly trade digital assets in the near term; however, more than 40% of institutions are already exploring on-chain payments, settlement, collateral management, and liquidity management. This indicates that institutional focus is not solely on Bitcoin’s price, but on whether the underlying financial infrastructure is mature.
He added that custody remains another key barrier. About three-quarters of institutions still view secure custody as a prerequisite before committing large-scale capital. For these institutions, the critical question is not whether to engage with digital assets, but whether digital assets can interoperate with the existing financial system.