Crypto and Capital in a Fragmented World: Dynamics, Risks, and Opportunities

• Interoperability between TradFi and DeFi will be a major theme in 2026

• Kraken is now moving into “plain old TradFi”

• Competition is heating up but TradFi is also looking for partnerships

The lines between traditional and decentralized finance are blurring after the two sides “crossed the stream” in 2025, with TradFi participants embracing DeFi technology and parts of the crypto-native industry moving into the regulated arena.

 “TradFi is moving into DeFi, whether that is [through] tokenized bonds, or companies starting to make use of decentralized finance protocols,” Lubin, one of the co-founders of Ethereum and a major proponent of decentralization, said.

Lubin referenced major market infrastructure providers – such as SWIFT – espousing Ethereum to develop a shared ledger together with 30 major banks. While TradFi is increasingly using the technology to upgrade processes such as payments and collateral movements, crypto-native industry players are dialing down their resistance to regulation. This is changing the competitive landscape for both sides.

Kraken’s Ripley said the exchange now views itself as a competitor to some of the biggest TradFi players, including the New York Stock Exchange, having evolved from a crypto specialist into an infrastructure provider that now also offers traditional assets. Kraken, which bridges the gap between TradFi and DeFi, is now moving into “plain old TradFi”, said Ripley. 

“We offer equities, derivatives on commodities, and so forth. But probably the most interesting thing is crypto tech now running the TradFi assets. Stablecoins are the first, most significant example. We have an implementation for public equities that we think is super exciting, X stocks,” he added. 

BNY’s Weinberg emphasized the integration of blockchain and distributed ledger technology to improve market infrastructure, enabling better settlements and interoperability. She highlighted the need for regulatory clarity for TradFi and DeFi, the mainstreaming of digital assets, and interoperability. Furthermore, she added that the new landscape is not just about cut-throat competition, but also partnerships.

“The role [BNY] plays is to leverage all the pieces – regulatory, additional cash and financial infrastructure – but then we play the role of interoperability with traditional systems,” she said. “We touch 20% of securities trading every day, we have USD 60 trillion in custody, and we are a USD 2.2 trillion asset manager. Embedding that in an interoperable way for our clients to grow is what we’re trying to do.”

The intermingling of the two worlds is reflected in the CfC St. Moritz Pulse Survey, which showed that 46% of respondents think that TradFi institutions are beginning to dominate digital assets.

“There are many [activities] which could be described as traditional finance or enterprises making use of decentralized protocols, and traditional finance onboarding itself to decentralized finance [and] decentralized protocols, including stablecoins.  That’s a phenomenon that is going to change the nature of money and payments, and the geopolitical architecture in the world,” he said.

Lubin added he believes that it is only a matter of time that regulation will be in place in the US and other parts of the world around DeFi protocols, especially in lending and borrowing. 

“Once that gets going, it will be gangbusters in a world of debasing currencies,” he said.