Decentralized finance remains at an early stage of institutional adoption, even as onchain protocols begin to gain exposure to traditional credit markets, according to Andrew O’Neill, analytical lead for digital assets at S&P Global.
Credit Products Are DeFi's Entry Point to Institutional Capital, S&P Says
30 March 2026 - 16:45 CEST
By Matt Neill
O’Neill said DeFi participation in mainstream financial products is emerging but remains limited in scale and is largely driven by crypto-native investors.
Speaking at ETHCC 2026 in Cannes, O’Neill pointed to the growing intersection between DeFi and structured credit markets, including collateralized loan obligations (CLOs). A CLO is a financial product that pools corporate loans and slices them into different risk levels for investors.
Institutional adoption remains limited
O’Neill said institutional capital flows into DeFi are still concentrated among specialized crypto funds rather than traditional asset managers. Cross-pollination between the sectors is driven largely by the digital asset side.
He pointed to the example of how DeFi protocol Sky has accumulated roughly $1bn to $1.5bn of CLO exposure via exchange-traded funds. This represents about 0.5% of the overall US CLO market.
He added that broader participation from traditional finance is likely to depend on further development of tokenized real-world assets and supporting infrastructure.
"It’s more crypto-native funds placing money into DeFi. As we see more adoption of the technology around real-world assets, that will change, but we’re really not there yet," he said.
Ratings gap highlights structural differences
O’Neill said the credit profile of DeFi protocols remains structurally different from traditional financial institutions, limiting their ability to achieve comparable ratings.
He noted that some tokenized funds have already reached triple-A ratings, the highest on S&P’s scale, indicating that blockchain infrastructure itself is not a barrier to credit quality. However, he said DeFi protocols lack key features that underpin higher ratings in traditional finance, including access to government support and central bank liquidity.
"When I think about financial institutions, for example, that get single-A ratings, that's generally because they operate in systems that provide a substantial amount of government support and access to emergency liquidity," he said.
"That’s the sort of thing that isn’t as readily available in DeFi."
Gradual maturation underway
O’Neill said the sector is progressing but remains some distance from achieving the stability and institutional integration seen in traditional markets.
He said the absence of formal backstops and established regulatory frameworks continues to constrain how DeFi is assessed from a credit perspective.
At the same time, he noted that increasing links between onchain protocols and traditional assets suggest a gradual maturation of the ecosystem. However, he warned that a DeFi platform achieving a coveted ‘A’ rating remains some way off.
"I think we’re probably some distance away from that for a rating on a DeFi protocol," he said, adding that the market is evolving as infrastructure, regulation and use cases develop.
