Traditional Finance ‘Blockchain-ification’: Pie in the Sky or Inevitable Future?

Five years after the ICO boom and bust, the notion of traditional finance assets existing on the blockchain is not nearly as far fetched

article-image

Alena Haurylik/Shutterstock modified by Blockworks

share

The dream that “everything will be on a blockchain” was a familiar chorus in the heady days of 2018’s ICO boom. ERC-20 tokens sprung up for every imaginable purpose, from pure Ponzis like BitConnect to coffee and cannabis supply-chain ecosystems that — pardon the pun — went up in smoke as soon as the bubble burst.

Five years later, the notion of a much broader range of assets existing on the blockchain is not nearly as far fetched. After all, so many assets are already traded electronically without any actual transfer of physical goods.

In a recent interview on the 1000X podcast, Don Wilson, founder of trading firm DRW and co-founder of Digital Asset Holdings, spoke to Blockworks about the possibilities of the future “blockchain-ification” of traditional finance assets.

He begins with an important caveat: “There are some assets that are physical assets, like nickel,” he says. “You can put nickel on a blockchain, but ultimately the nickel has to sit somewhere.”

“If somebody steals the nickel, then you have a blockchain that represents nickel and the nickel’s not there — and that’s a problem, right?”

“So that kind of stuff is something that still has this intimate link to the physical world that is super critical.”

Many instruments are already virtual

On the other hand, many instruments in finance are already “virtual” in nature, such as equities and Treasurys, he says, “and people don’t usually walk around with their Treasury certificates.”

Wilson says “those assets probably lend themselves more to digitization,” or as podcast host Van Bourg describes it, “blockchain-ification.”

“Right now,” Wilson says, “we’re experimenting with intraday repo using blockchain technology.”

Wilson describes the growing capacity for the digitization of assets built on the Canton Network, a “digital assets holdings blockchain.” The network aims to use permissioned blockchains to bring different bank and financial companies’ applications together, allowing for greater ease of use and security across platforms.

“It enables value to be moved in real-time and even 24/7. And that’s the kind of thing that will make clearing houses more resilient if they want to avail themselves of that technology.”

The current system is clunky

With today’s financial system, wiring money internationally can take hours and is only possible “when the wire window is open,” he says.

Wilson illustrates current limitations with the example involving the spread between a futures contract in London and another in the United States. “After London hours, there’s a big rally and you’re long the futures in London, and you’re short the futures in the US.”

Pulling variation margin out of the London market and moving it over to satisfy the negative variation in the US isn’t feasible with the current system, according to Wilson. 

“You’re not even close,” he says. “What will happen is, the next day, that futures contract will rally.” 

“Assuming then, the next day we open up and the market’s unchanged, then the London futures contract will rally and the variation margin will show up in your account,” he says.

“At that point, you can wire it out maybe that day, maybe the next day. Maybe now you’re running into the weekend.” 

It just doesn’t work well with traditional finance technology, he says. “The whole system is just very clunky.” Everything is slow to move around and requires “a lot of extra capital” to deal with all the delays, according to Wilson.

“Being comfortable moving out the risk curve is super important,” Wilson says. “If you can move out the risk curve and you have access to super low-latency tools and connectivity, then you’re in a really strong spot. That’s where we try to be.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

We believe DoubleZero, given its symbiotic relationship with validators & searchers, promise to boost overall network efficiency and throughput, lack of competition, and ability to serve many blockchain ecosystems, will command meaningful pricing power and could command a meaningful take of priority revenues across blockchains.

article-image

A new policy framework says decentralization should be judged by control — not vibes

article-image

You know about the Bitcoin Standard — what about the Bitcoin Scholarship?

article-image

Toku’s suit accuses an ex-employee of stealing confidential business information and sharing it with competitor Liquifi

article-image

Partial recovery is already in motion, according to the Loopscale team

article-image

Microsoft, Meta, Amazon and Apple are slated to report Q1 earnings this week, and we’re watching one especially closely

article-image

Tariff concerns on corporate earnings and weakening of the US dollar contributed to the surge, CoinShares exec says