Why is it so difficult for institutional funds to go on-chain? Ultimately, it's a trust issue. Most blockchain projects adopt an on-chain fund pool model, where user funds are directly locked into smart contracts. It looks very Web3 and decentralized, but the risks are also evident—smart contract vulnerabilities, platform misappropriation of funds, and other issues can cause billions of assets to vanish in an instant. That's why you'll find that most large financial institutions stay far away from this approach.

In 2025, Dusk's collaboration with ING Bank of the Netherlands is, to some extent, an answer to this problem. Their approach is quite interesting: instead of stacking all funds on-chain, they separate custody and trading. How exactly do they operate? Dusk has established an independent fund custody module that doesn't directly manage funds but is responsible for receiving and forwarding transaction instructions; the actual custody of funds is entrusted to licensed financial institutions like ING Bank.

The process works like this: institutional users perform asset tokenization transactions on the Dusk platform. Funds do not enter on-chain accounts but are managed through dedicated accounts opened by ING Bank. When Dusk's custody module receives a transaction instruction, it synchronizes with ING's system; ING verifies the on-chain information, completes fund transfers and clearing, then feeds the data back to the chain via an oracle, enabling real-time reconciliation of on-chain assets and off-chain funds. This way, the ownership of funds always remains with the user and the licensed bank, while blockchain ensures transaction transparency and ledger recording—each doing their part. This "on-chain trading, off-chain custody" separated architecture not only addresses technical risks but also alleviates compliance concerns for institutions.