State Street warns DeFi security gaps for institutions

State Street said institutional investors are demanding stronger blockchain security following a surge in decentralised finance exploits.

Speaking at Consensus Miami, digital assets head Angus Fletcher said the industry must address critical risks before scaling tokenised real-world assets.

“What are the things we actually need to solve now for a future where we've got trillions of dollars worth of activity on-chain? We need to start to unpick those issues now,”

Fletcher said.

Recent attacks, including a $295 million exploit on Drift and a similar-sized breach involving KelpDAO, have heightened concerns about security and risk management.

Fletcher said interoperability and legal clarity across blockchains remain key challenges, particularly around ownership rights when assets move between networks.

Institutional participants require clear frameworks to understand custody, legal title and risk exposure before committing capital at scale.

The comments underscore growing pressure on the crypto industry to strengthen infrastructure as it seeks to onboard trillions of dollars in tokenised assets.