Fidelity: The Federal Reserve's interest rate cuts may rekindle major institutions' interest in DeFi and stablecoins

ChainCatcher news, according to Cointelegraph, Fidelity stated that the anticipated Federal Reserve interest rate cuts could rekindle major institutions' interest in decentralized finance (DeFi) and stablecoins, provided that infrastructure is further developed this year.

In the 2024 Digital Asset Outlook report released on January 13, Fidelity noted that although institutions were expected to engage in DeFi for returns last year, they ultimately did not, as the Fed's interest rate hikes led them to shift towards "what is considered safer" traditional fixed-income products. "In the current risk-off environment, institutions find that the mid-single-digit returns offered by DeFi are too low given the associated risks of trying smart contracts."

The report stated that if DeFi returns "become more attractive than traditional finance (TradFi) returns again, and more developed infrastructure emerges," institutions may have "new interest" in DeFi in 2024.