How SOC 2 Compliance is Paving the Way for Institutional DeFi

The DeFi industry is transitioning from retail-driven growth to institutional adoption, requiring institutional-grade trust and security. This paper explores SOC 2 compliance as a foundational standard linking TradFi and DeFi. Through trends, risks, and compliant platforms, it shows SOC 2 is becoming the price of entry for protocols targeting trillions in institutional capital.

A Market in Transition

A 2025 EY and Coinbase survey shows 86% of institutional investors have or plan digital asset exposure this year, with 83% aiming to increase allocations. DeFi participation remains cautious—only 24% are involved, though 50% of others plan to join within two years, potentially pushing adoption to 75% by 2027. The key obstacle: risk.

It’s not volatility, but uncertainty in security and operations. Over $2.2 billion was stolen in 2024, and $2.17 billion by mid-2025, often from smart contract flaws and infrastructure exploits. Institutional fiduciaries demand evidence that DeFi meets TradFi-level security. SOC 2 is emerging as the framework to meet these expectations and enable institutional engagement.

What is SOC 2?

Developed by the AICPA, a SOC 2 report is a third-party audit of a service organization's internal controls, based on five flexible Trust Services Criteria (TSC).

There are two types of SOC 2 reports:

• Type I evaluates control design at a specific point, showing policies and procedures are in place.

• Type II assesses the design and operating effectiveness over 6–12 months. It’s more rigorous and widely respected for proving sustained compliance.

For institutional investors, SOC 2 Type II is the gold standard, assuring that security controls are well-designed and consistently effective—a baseline language of trust.

SOC 2, ISO 27001, and DORA

While SOC 2 is essential, it’s not a cure-all for blockchain-specific risks. As Chorus One explains, SOC 2 validates operational integrity but not resilience against threats like slashing or smart contract exploits.

This has driven a layered compliance model:

1. SOC 2: Establishes trust in operational processes and internal controls.

2. ISO 27001: Establishes an Information Security Management System (ISMS).

3. DORA (Digital Operational Resilience Act): Requires resilience capabilities, including incident reporting, stress testing, and oversight for financial institutions and ICT providers.

Together, these frameworks ensure both the operational rigor of TradFi and resilience to digital asset-specific risks.

A Comparative Look

More DeFi and Web3 infrastructure providers are adopting rigorous standards, signaling industry maturation across diverse blockchains and compliance approaches.

Сomparative analysis of several key players leading this charge:

Blockdaemon and Kiln provide institutional-grade staking services across multiple networks, forming the infrastructure backbone of DeFi. Both have achieved SOC 2 Type II certification, with Blockdaemon also attaining ISO 27001, underscoring their enterprise-grade security. Kiln, which operates ~4.5% of Ethereum’s network, emphasizes its zero-slashing record as proof of operational excellence.

At the application layer, Marinade Finance on Solana sets a high bar for liquid staking protocols. Its SOC 2 Type II certification is notable given the complexity of managing over 100 validators and smart contract logic. This positions Marinade to support future Solana ETF applications, which require compliant infrastructure.

Chainlink, the leading oracle network, holds SOC 2 Type I and ISO 27001 certifications for its core services, including Data Feeds and CCIP. These certifications are vital, given its critical role in DeFi’s data infrastructure.

New compliance frontiers are emerging on the XRP Ledger (XRPL), which holds vast idle capital but has a nascent DeFi ecosystem. VS1.finance is the first platform to achieve SOC 2 Type II certification—a key milestone for an ecosystem Ripple aims to position for institutional use, supported by a native DEX and upcoming regulated stablecoin (RLUSD).

Unique Challenges for Non-Custodial DeFi Platforms

Achieving SOC 2 compliance takes 6–18 months and over $100,000. For non-custodial DeFi platforms that don’t hold user keys, audits focus on compensating technical controls rather than traditional key management.

Smart Contract Security is paramount: platforms need independent audits, formal deployment processes, and continuous monitoring. Vulnerabilities are immutable and can be catastrophic.

Front-End Application Security is critical, as the dApp is the primary attack vector. Controls must address XSS, CSRF, phishing, enforce input sanitization, transaction previews, and supply chain integrity.

Secure Wallet Integration requires trusted libraries and best practices like avoiding auto-connects. These must be enforced to protect self-custodied keys.

Despite challenges, compliance is a key differentiator. Protocols that prove security and operational excellence will attract institutional capital.

The Path Forward: Continuous Assurance and Innovation

Compliance is evolving toward continuous assurance with real-time monitoring and dashboards. As global regulation matures, voluntary SOC 2 standards will align with mandates like the EU's DORA.

Institutional capital demands security, transparency, and resilience. Meeting these standards builds the next generation of financial infrastructure.

Conclusion

SOC 2 is becoming the gold standard for institutional DeFi. Combined with ISO 27001 and DORA, it forms a strong compliance foundation. Leading platforms are advancing DeFi maturity and unlocking institutional capital.