Institutional Adoption in Crypto: How Custody Partnerships with Axelar and Frax Signal a Strategic Shift Toward Mainstream Integration

The crypto industry in 2025 is witnessing a seismic shift as institutional players increasingly adopt blockchain infrastructure. At the heart of this transformation are custody partnerships between protocols like Axelar and Frax and regulated custodians such as Crypto.com. These collaborations are not just about securing assets—they represent a strategic alignment between decentralized infrastructure and institutional-grade compliance, signaling a maturation of the crypto ecosystem.

The Infrastructure Maturation Play

Axelar, a cross-chain interoperability protocol, has positioned itself as a critical bridge between fragmented blockchain ecosystems. By enabling seamless token transfers across chains like Ethereum, Solana, and Cosmos, Axelar reduces operational complexity for institutions managing multi-chain portfolios. Its partnership with Crypto.com Custody to safeguard AXL tokens—used for validator incentives and network operations—demonstrates how cross-chain infrastructure is being hardened for institutional use [1].

Frax, meanwhile, has leveraged its hybrid stablecoin model (frxUSD) to address institutional demand for stable, compliant digital assets. By partnering with Crypto.com to manage custody and liquidity for FRAX and frxUSD, Frax ensures that institutional clients can access its stablecoin ecosystem with the same security and transparency expected in traditional finance [2]. This is particularly significant as frxUSD’s variable collateral mechanism allows it to dynamically adjust to market conditions while maintaining its peg to the U.S. dollar [3].

Institutional Trust Through Custody

Custody has emerged as the linchpin of institutional adoption. According to a report by 3CQS Crypto Screener, 81% of the $140 billion in U.S. crypto ETFs are held in custody, underscoring the critical role of secure asset management in building institutional confidence [4]. Crypto.com’s partnerships with Axelar and Frax exemplify this trend. By offering insured custodial accounts, audit-ready operations, and staking capabilities, Crypto.com reduces operational risks for institutions, enabling them to engage with crypto assets without compromising compliance [5].

For example, the Axelar Foundation’s decision to entrust Crypto.com with AXL tokens—critical for validator rewards and grants—highlights the protocol’s commitment to enterprise-grade security. Similarly, Frax’s integration with Crypto.com’s liquidity tools allows institutional investors to mint and redeem frxUSD with minimal friction, further solidifying its appeal as a stablecoin of choice for institutional portfolios [6].

Mainstream Integration and Regulatory Tailwinds

The strategic shift toward custody-driven adoption is amplified by regulatory developments in 2025. The passage of the GENIUS Act and CLARITY Act in the U.S. has provided a clearer legal framework for stablecoins and institutional crypto activities, encouraging more players to enter the space [7]. This regulatory clarity, combined with infrastructure innovations like Axelar’s cross-chain bridges and Frax’s stablecoin design, is creating a flywheel effect: institutions gain trust through secure custody, which in turn drives broader adoption and liquidity.

Data from Q3 2025 further validates this trend. U.S. spot Bitcoin ETFs attracted $118 billion in institutional inflows, with BlackRock’s iShares Bitcoin Trust (IBIT) alone amassing $86 billion in assets [8]. While Bitcoin remains dominant, the rise of institutional-grade stablecoins like frxUSD and the expansion of cross-chain infrastructure suggest that the future of institutional crypto adoption will be multi-faceted, with custody partnerships playing a central role.

The Road Ahead

As the crypto industry matures, the lines between traditional finance and decentralized infrastructure are blurring. Custody partnerships like those between Axelar, Frax, and Crypto.com are not just about securing assets—they’re about building the trust and compliance frameworks necessary for mainstream adoption. For investors, this signals a pivotal moment: the infrastructure is no longer experimental. It’s operational, scalable, and increasingly institutionalized.

The next phase of crypto’s evolution will likely see more protocols adopting similar strategies, integrating with regulated custodians, and leveraging cross-chain interoperability to meet institutional demands. For now, Axelar and Frax’s partnerships serve as a blueprint for how decentralized infrastructure can align with the rigor of traditional finance—proving that the future of crypto is not just speculative, but structural.

Source:
[1] Axelar and Frax Choose Crypto.com for Secure Digital Asset Infrastructure [https://coinpaper.com/10930/axelar-and-frax-choose-crypto-com-for-secure-digital-asset-infrastructure]
[2] Comparative Analysis of Stablecoin Issuance Across Ethereum-compatible, Solana, and Cosmos Chains [https://medium.com/@gwrx2005/comparative-analysis-of-stablecoin-issuance-across-ethereum-compatible-solana-and-cosmos-chains-bf5f5f13a2d9]
[3] Pegkeeper Onboarding Review: Frax frxUSD - Llama Risk [https://www.llamarisk.com/research/pegkeeper-onboarding-frxusd]
[4] Institutional Crypto Adoption & Regulation: Q2 2025 Trends [https://pinnacledigest.com/blog/institutional-crypto-adoption-regulation-q2-2025-trends-analysis]
[5] Crypto.com Secures Custody Deals with Axelar and Frax Amid Rising Institutional Demand [https://www.mexc.fm/en-TR/news/crypto-com-secures-custody-deals-with-axelar-and-frax-amid-rising-institutional-demand/89158]
[6] 3CQS Crypto Screener [https://www.3cqs.com/crypto-screener/]
[7] August 2025: The Road to Regulatory Clarity [https://research.grayscale.com/market-commentary/august-2025-the-road-to-regulatory-clarity]
[8] Institutional Capital Floods Crypto Market: Bitcoin ETFs Drive Record Inflows [https://www.financialcontent.com/article/marketminute-2025-9-9-institutional-capital-floods-crypto-market-bitcoin-etfs-drive-record-inflows]