The following is a guest post from Jesse Knutson, Head of Operations at Bitfinex Securities.

Tokenization is at a tipping point. Outside of the crypto world, awareness is growing that tokenizing assets really could be a ticket to doing finance differently. 

Traditional banking giants are busy working on projects to understand how best they can tap into this potential. Governments in major financial centers from the UK to Singapore have launched sandboxes to see how regulation could support capital markets infrastructure underpinned by blockchain technology.

The blockchain and finance press have been littered with headlines of successful pilots, including Siemens’ $330 million digital bond, issued last year as part of the European Central Bank’s trial to settle central bank money on blockchains.

These news stories have undoubtedly highlighted tokenization positively. But there’s a problem. Many of the reported ‘success stories’ are so far removed from what tokenization could—and should—be that they are essentially TradFi transactions in disguise. 

Take the Siemens example. It was undoubtedly a success insofar as it proved that digital bonds could be settled much more quickly than is currently possible via traditional means. However, the bond was issued on a private blockchain, which needed Deutsche Bank to facilitate settlement, and it seemed to offer no mechanism for self-custody. 

I believe this is not what a tokenized bond should look like. Tokenization’s core is disintermediation, which empowers users by streamlining the technologically obsolete parts of the capital markets ecosystem.

Tokenization replaces the work of transfer agents, central depositories and clearing systems, custodians, and compliance reporting with cheaper, faster, and more transparent on-chain solutions. At the same time, it offers investors more flexibility, including by offering much lower entry points compared to traditional markets.

I fear that the TradFi behemoths could commandeer tokenization further, looking for ways to create new, innovative products for their client bases. Larry Fink’s recent call for the U.S.’s SEC to “rapidly approve the tokenization of bonds and stocks” could mean we’re edging closer to the point of no return. 

Despite President Donald Trump’s apparent embrace of the crypto community, the concrete announcements we have seen on the U.S.’s position on crypto—notably the strategic bitcoin reserve—have been viewed by some as underwhelming. This could prove pivotal for the incumbent banking sector. 

While the major crypto players are still grappling with where the industry is heading, this potentially allows the banking lobby to capitalize on a crypto-positive U.S. administration.

It will be a missed opportunity for tokenization if we end up with a regulatory environment that means traditional finance players leverage blockchain technology for their own ends, improving their bottom lines while developing new products for their narrow client bases while maintaining the status quo of our current capital markets.

The investors likely to benefit from tokenized products from large banks are minuscule compared to the general population. Millions of people worldwide would relish the opportunity to invest in stocks or corporate bonds, but they can only dream of reaching accredited investors or equivalent thresholds.

Tokenization also offers investors an opportunity to regain control over their assets. Technology like Blockstream’s Liquid Network leverages whitelists to allow peer-to-peer trading, move assets across trading platforms, and even self-custody assets.

In the future, we look forward to more granular voting and dividend payments. Integration with USDt and BTC is also important to allow a low friction flow of funds between conventional, RWA, and crypto markets. 

Our current capital markets are only made for the few. Tokenization allows us to untangle that. We now have the technology to enable any small business to raise the capital it needs to grow without having to engage banks and all within regulatory and compliance guardrails.

For prospective investors, anyone with as little as $1 to invest can start to grow their wealth via tokenized U.S. treasuries. We’re already seeing this in El Salvador with NexBridge’s USTBL product. 

If we’re to avoid a TradFi takeover of tokenization, we need regulators to understand the bigger-picture promise of tokenization. While tokenized versions of sophisticated investment products must be appropriately regulated, we also need all major jurisdictions to provide clarity on how tokenized products can be opened up to any retail investor, regardless of how much they have to invest. 

Tokenization represents a once-in-a-generation opportunity to democratize access to capital. We owe it to the millions of underbanked people and businesses worldwide to not lose sight of this.

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The following is a guest post from Steven Pu, Co-founder of Taraxa.

There’s no question about it, President Trump’s inauguration is a watershed moment for American crypto innovators. In just little over a week, we’ve seen a rapid series of crypto-friendly initiatives helmed by unambiguously pro-crypto leadership.

These initiatives are in stark contrast to the irrational persecutory stance taken by regulators of the previous administration. Whilst speculation stirs around geoeconomic outcomes, a transformed landscape will more importantly liberate previously stifled US-based developers. America is back on track to reclaim leadership in crypto. 

Persecutory Regulators Drained US of Crypto Talent 

Crypto is a fast-growing industry in which America can and must reclaim leadership. Since 2015, the crypto market has grown 107.7% annually, from $5 billion to $3.68 trillion –  in spite of unfriendly regulatory environments in every major economy worldwide. Much of this global growth was driven by rapid technical innovation, predominantly emanating from the United States, positioning the American market to capture the economic upside. 

But persecutory regulators have heaved talent out of America with great force. The US had 38% of the world’s crypto engineering talent in 2015, but dropped to just just half that at 19% by 2024. In a market that’s doubling every year, and home to the vast majority of the infrastructural technical innovations, this has been a massive brain drain. Given crypto’s decentralized and digital nature, talent is highly mobile, and US regulators in the past have given them ample reasons to leave. 

Regulatory Failure on a Massive Scale  

Prior to 2025, regulators sought to stifle American crypto innovation and economic opportunity using whatever means necessary. Regulators were not only busy persecuting compliant actors such as Coinbase, Kraken, and Uniswap, they also found plenty of time to fabricate evidence to persecute startups like DEBT Box. In many such cases, regulators even used de-banking as leverage in its irrational crusade to destroy American crypto companies. 

But American consumers gained little from such regulatory zealotry, since the regulators failed to protect consumers from the most catastrophic crypto frauds in history. In 2022, FTX lost over $8 billion of user deposits, while Terra Luna vaporized over $40 billion of market valuation, causing a cascade of failures in companies such as BlockFi, Genesis, Voyager and Celsius -to name just a few. In every single case, regulators utterly failed to note any wrongdoing altogether or noted far too late. 

There were no winners under this hostile and incompetent regulatory regime. Consumers lost, innovators lost, and America lost precious time to capture and foster this new and rapidly growing sector. 

Hope is on the Horizon 

American builders are resilient. Despite having an actively hostile regulatory environment, America is leading the crypto industry on many fronts. Most of the key infrastructure powering the crypto industry, including their precursor technologies in cryptography and distributed computing, were invented right here in America. 

We can see plenty of hope from just the first week of the new administration- an SEC subcommittee is set to reform crypto rulemaking under Hester Pierce; and a Senate subcommittee on digital assets will be formed under Cynthia Lumis. We’re seeing positive changes in both regulatory and  legislative tracks. It’s a great beginning towards the short and long-term sustainability of a healthy American crypto industry. 

Undoubtedly, there’s still a great deal more to do. Much of the financial legislative and regulatory infrastructure still remains fundamentally incompatible with the crypto’s decentralized nature. The Infrastructure Investment and Jobs Act of 2021, for example, expanded the definition of a “broker” to potentially include crypto wallets and even network miners and validators, making it impossible for anyone in crypto to stay in compliance. 

We nevertheless remain very hopeful.  The new administration has strongly and swiftly signaled its intent to improve the regulatory environment, making it more transparent, rational, and pro-growth. Talks of a Bitcoin profit frenzy, or even geoeconomic power shifts, may energize communal discussion, but what’s really at the crux of importance is the potential reversal of blockchain brain drain.

Restored freedom to innovate in America – that’s what’s on the line. There is now every chance that it will materialise in the crypto realm, sending America back on its way to reclaim its position at the helm of transformation.

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