Institutional staking on the rise

The year 2025, now drawing to a close, will be remembered as the moment institutional players entered the crypto ecosystem at scale. The launch of the first Bitcoin spot ETFs (Exchange-Traded Funds) in January 2024 triggered the shift. 

Since then, the market has seen a surge in altcoin ETPs (Exchange-Traded Products), the expansion of corporate crypto treasuries, and the accumulation of Bitcoin and selected altcoins by sovereign wealth funds. Banks, asset managers, hedge funds, pension funds, venture capital firms and centralised exchanges have all moved into the sector.

By 2026, the market could move toward a more institutionalized form of DeFi. In recent months, staking solutions designed specifically for professional investors have gained momentum. Players such as Grayscale, Coinbase Prime, Figment, Kiln, and Chorus One are shaping a distinct vertical now known as staking-as-a-service, tailored to the operational, regulatory, and custody requirements of large financial institutions.

The institutional staking services market reached USD 5.8 billion in 2024 and is projected to grow to USD 33.3¹ billion by 2033.

This evolution could profoundly reshape the DeFi landscape. It introduces new technical, regulatory, and systemic challenges, but also opens significant strategic opportunities for the broader ecosystem.

What is staking?

Staking consists of locking tokens on a proof-of-stake (PoS) blockchain to validate blocks, ensure consensus and secure the network. Validators commit capital to the protocol and, in return, receive rewards that reflect both the chain’s monetary policy and the value of the security they provide. On Ethereum, baseline yields typically range from 2-3% APY, while other blockchains like Solana tend to offer higher base yields, usually 5-7%.  

Until recently, staking participants fell into three main categories: solo stakers operating their own validators, on-chain pools such as Lido, Rocket Pool or Marinade, which enable delegation, and centralised exchanges like Binance, Kraken and Coinbase, which provide retail-oriented staking services. 

A fourth category is now emerging: institution-focused native operators, designed to meet the operational, custody, and compliance requirements of regulated financial entities. These specialised operators, including several of the industry's largest institutional staking providers, have become central to this new segment.

In parallel, financial products are also evolving, with the rise of ETPs that integrate staking natively, allowing investors to gain exposure to Proof-of-Stake assets while earning staking rewards. Several issuers, including CoinShares, now offer such products globally.

The movement is no longer limited to financial institutions, as it is now extending to sovereign actors. The Kingdom of Bhutan offered the first publicly confirmed example of a government engaging in on-chain staking when it transferred 320 ETH (nearly $1 million) to Figment’s validator infrastructure on November 27.

A game changer

Regulatory evolutions have opened the door to institutional participation in staking. In Europe, the MiCAR framework provides clear operational and compliance requirements for regulated entities. In the United States, the SEC’s August 2025 decision not to classify liquid staking as a security removed one of the main legal obstacles for large allocators. 

More importantly, the US Treasury has now explicitly cleared the way for trust structures to participate: the Internal Revenue Service issued new guidance, described by Treasury Secretary Scott Bessent as providing a “clear path” for staking digital assets through trusts. Under the new rules, trusts may stake cryptoassets without jeopardizing their tax status as investment trusts or grantor trusts for federal income tax purposes, effective immediately.

Beyond regulation, major progress in validator infrastructure, institutional custody, multi-chain staking frameworks, and enterprise-grade reporting has made staking operationally viable at scale.

For large asset managers, including pension funds, endowments, and conservative allocators, the implications are substantial. Many had stayed on the sidelines due to legal uncertainty and operational risk. These barriers are now falling.

With clearer rules and institutional-grade infrastructure, staking is becoming a credible investment and yield strategy. This is expected to drive increased demand for both native and liquid staking across major proof-of-stake ecosystems.

As institutional capital flows into PoS networks, it will also reshape their security models. Larger and more stable validator capital bases make networks more resilient, harder to attack, and ultimately more secure.

In short, the industry is entering a new phase in which staking and DeFi tools are transitioning from experimental mechanisms into components of institutional digital finance.

Risks and safeguards

The main risks in native staking are slashing and operational or custody failures. Slashing penalises validators for downtime or double-signing and can directly reduce staked funds. Institutions limit this risk by using providers with high uptime, redundancy and strong security. Custody and operational issues often occur when institutions run validators themselves without the required expertise. Working with specialised staking providers helps avoid these problems and reduces operational burden.

Beyond these technical concerns, market risks remain. Crypto volatility can outweigh staking yields, producing net losses even when rewards are stable. Many PoS networks impose lock-up or unbonding periods, restricting liquidity relative to traditional financial assets. 

These risks have always existed for retail users, but the scale of institutional capital amplifies their potential impact. Large stakes increase the potential for losses and introduce the possibility of systemic effects, both within the crypto ecosystem and, over time, in the broader financial environment. A major failure could have significant consequences for the institutions involved and could propagate risk through interconnected markets.

As institutional participation expands, these concerns highlight the importance of resilient infrastructure, transparent risk controls and adherence to high compliance standards across staking providers.

Institutional restaking, the next frontier

The institutionalisation of staking is now paving the way for institutional restaking, a new layer of capital efficiency that has emerged over the past few years. Restaking allows participants to reuse their staked ETH across additional networks, helping secure multiple protocols simultaneously. EigenLayer has popularized this model by enabling Ethereum stakers to extend their economic security to other services in exchange for extra rewards.

A key enabler of this evolution is the rise of liquid staking. Liquid staking derivatives (LSDs) such as stETH or cbETH allow users to stake assets while keeping a liquid representation of their position. This idea has now evolved into liquid restaking tokens (LRTs), which represent restaked positions and allow capital to circulate within DeFi while still contributing to network security. 

For institutions, these instruments offer access to restaking yields without locking assets into illiquid validator setups, a key requirement for treasury, compliance and risk-management processes. As with staking more broadly, institutional participation could help reshape the restaking landscape by bringing greater stability, stronger governance and improved operational discipline to this emerging segment.

¹Institutional Staking Services Market Research Report 2033