Banking on Blockchain: Institutional Lending, Tokenized Assets, and the Evolution of Capital Markets

• Banking is expected to be fully on-chain over the next five to ten years.

• Existing regulations can accommodate new technologies like Avalanche

• Hindrance to the  uptake in tokenization revolves around use case and not  limitations in technology or regulation

The panel discussed the evolution and future of blockchain-based banking and tokenized assets, emphasizing the core benefits that include reducing intermediaries, raising efficiencies and improving international payments.

“Moving banking on-chain goes back to the core proposition of the benefits of blockchain, which is that you can transfer anything of value between two people or entities without intermediaries, on the spot, as long as you have access to the internet,” Sygnum’s Imbach said.

Imbach expects banking to be fully on-chain within the next decade, but he noted this can only happen when regulated infrastructure and market participants grow in their numbers. Securitize’s Domingo highlighted that progress has already sped up in the past two years, pointing to large Wall Street players such as BlackRock entering the space as positive drivers.

“Their CEO is [publicly] talking about tokenization and saying that this is the future of asset management,” he said, providing an example of shifting attitudes. Larry Fink, BlackRock’s chief, used to be a vocal naysayer about blockchain and crypto, but he changed his mind, and towards the end of last year, he published a piece in the Economist calling tokenization the future of Wall Street.

Domingo emphasized that no additional regulatory unlock is needed, as existing regulations can accommodate new technologies, adding that there is room for further revenue growth and expansion in the space in the next three to five years.

Copper’s Kuchinad, meanwhile, contended that the real hindrance to the uptake in tokenization has been use cases and not limitations in technology or regulation. This has also changed as regulatory attitudes shifted.

“Because of the regulatory and political tailwinds, institutions are taking over the space, and that means we're seeing a lot more of those use cases,” he said.

The panel emphasized the importance of compliance, the potential for private blockchains to enhance security and privacy and stressed the need for interoperability between public and private chains. They also discussed the need for better integration of blockchain with traditional banking systems and the growing importance of privacy in blockchain applications.