In Paul Atkins as chair of the US Securities and Exchange Commission, the path “towards the tokenization of the financial system” is now clear, according to Sergey Nazarov, co-founder of the chainlink labs.
Talking to cointelegraph, Nazarov said it would not be easy because it had a murder of separate challenges about tokenizing data, cross-chain connection, compliance and many other places. But if and when it happens, the consequences can be overwhelming.
Just consider that the market capitalization of all cryptocurrencies in the world is about $ 4 trillion. If the traditional financial ownership of the financial ownership is to be exposed and brought onchain, the cap cap can boost ten times or more, he said.
“What people do not fully appreciate about Tradfi (traditional finances) is its thin size,” Nazarov said.
Trump has begun to change tokenization
The global asset management industry has grown in a record-breaking of $ 128 trillion In assets under Management (AUM) in 2024, up to 12% from last year, According to In a recent report from the Boston Consulting Group. A good part of the owners is regulated by institutional investors, including insurance companies, pension funds, wealth -wealth funds, endowment and family offices.
Now look at the crypto sector. This $ 4-trillion market cap was strengthened by retail investors, mentioned Nazarov. “How much more demand is retail? Maybe (we reach) $ 8 trillion, maybe $ 10 trillion, but not $ 50 trillion. To get $ 50 trillion, you need a tradfi.”
Prior to US president Donald Trump received the office at the start of 2025, US regulators warned institution investors to remain clear in Crypto. “Don’t touch this thing; it’s illegal,” they said, recounts Nazarov. “But now the regulators say, ‘it’s not just this No. Illegal, we want you to do this. ‘”Thus, the movement of significant amounts of tradfi onchain assets seems inevitable -” as long as the macroeconomy is not a crater. “
A “cratering” can be caused by an economy moving from a “risk-on” to a “risk-off” investment environment. It is not necessary to be a basic perturbation (for example, an economic depression) to tilt to “risk-off” — a subtle contraction can happen.
“All the new tokenized possessions require an active market where people want to try new things, trade and deploy capital to new instruments,” Nazarov acknowledged.
However, even with a collapse, tokenization will eventually occur – not just fast. “So far, the conditions are positive: interest rates are expected to be cut off, and the SEC chairman is making speeches about how to get everything out. I can’t imagine a more positive scenario.”
Related: Crypto markets are preparing for Fed Rate Cut in the middle of Governor Shakeup
When Trump runs for office again back in 2024, he Says He will be the “President of the Crypto.” So far, he has delivered, in the view of Nazarov.
“We’ve had SEC meetings early in the year,” he recalled. He met SEC Commissioner Hester Peirce, who was appointed in Trump’s first term, as his team did. “I will say he already has a green light to start doing things early in the year.” This was before the US Senate confirmed the Atkins on April 9.
“So, a lot of work was done, and then it became more public once it was clear who the chairman would be. At that point, the risk and doubt were removed from the equation.”
In May, Cointelegraph reported that tokenization was Having its breakout moment. Companies like Blackrock, Free and Multibank have made billions-dollar tokenization moving, “the sign of transition from theory to implementation.”
The growing complexity of the blockchain “oracle”
Parallel to, and sometimes working in conjunction with, the process of tokenization is the evolution of blockchain oracles, which is chainlink’s main business.
Oracles are creatures that connect blockchains to external systems. A “pull-based Oracle,” for example, gets data from the real world (i.e., offchain) and will deliver it to a blockchain network where it can be used in smart contracts. This information can be as simple as the price of a stock or a cryptocurrency at a certain time of day.
The less common and more complex are “Push-based oracles,” which allows smart contracts to deliver commands to the offchain systems that motivate them to perform certain actions. An example is an oracle that “pings” of a system of Internet of things to unlock a car door (i.e., something real world) after a rent payment confirmed to a blockchain.
Related: Do TGEs become the end of blockchains?
Chainlink is the largest oracle provider in the world. It has over 1,000 spreads in about 15 wide categories, including oracles for data, cross-chain connection, compliance, identification and risk management. Some projects today involve many oracles.
An actual case of use (see chart below), for example, uses three different oracles -one to write appreciation data on a contract, one to to -synchronize contract with another chain, and a third to synchronize data back to an institution’s accounting system.
The third oracle in the example is a compliance with Oracle. It provides automatic identity services, including your customer’s knowing and anti-money laundering verification, which is essential for institutional investors. Other oracles in the example were used to transfer data throughout the blockchains, this time from a private blockchain owned by Australia and New Zealand (ANZ) banking group to a chain of Ethereum Sepolia. The transaction is between the two giant Tradfi – ANZ and Fidelity International – with support from the Hong Kong Monetary Authority, a central bank.
Another example (see below) is involved in the transfer of tokenized Hong Kong dollar from a private chain to a public chain and to a tokenized fund. The tradfi giant UBS is the asset manager in this case, the SBI Digital Markets are the distribution of funds and carers, and the funds are transferred through the chainlink’s Oracle Network from the Arbitrum Blockchain to the Ethereum Blockchain.
Not only Singapore, Hong Kong and Dubai
Nazarov noted that the two cases of use provided above were involved with the Hong Kong Monetary Authority and the Monetary Authority of Singapore, respectively. Last year, those two covers, along with Dubai, “are the only places where these things are possible. Now we do this in the US, along with regulators.”
Nazarov expects some major US tokenization projects to enter into labor this year, but “next year, you will see a race, and by year afterwards, we will have a significant volume.”
One should see at least $ 1 trillion in new tokenized-asset flows for two to three years, and “maybe a lot of trillion,” Nazarov added. “At that point, tokenization will be a big part of the crypto industry to redefine what the industry is.”
He applauded the Atkins and the current administration for forward thinking, which was pro-crypto as well as pro-tokenization. “That’s important because crypto is what the industry is today, but tokenization is where it next is,” he told Cointelegraph.
Magazine: ‘Help! My robot vacation steals my bitcoin ‘: when smart devices attack
