The Shift to Public Blockchains in Traditional Finance

Apr 1, 2024

In the ever-evolving landscape of financial technology, a notable shift is occurring among traditional financial (TradFi) institutions: a growing preference for public blockchains over private ones. This trend is underscored by recent developments and endorsements from major firms, signaling a potential new norm in the sector.

BlackRock Leads the Charge

Public Blockchains

A pivotal moment in this transition came when BlackRock, the world's largest asset manager, launched its $100 million tokenized 'BUIDL' fund on the Ethereum network in March. This bold move not only spotlighted Ethereum's capabilities but also demonstrated the growing institutional confidence in public blockchains. According to Dune Analytics, the BUIDL fund now boasts $288 million in assets, a testament to its success and appeal.

The decision to go public rather than opting for a private, KYC, and AML-regulated network speaks volumes about the perceived benefits and future direction favored by leading financial entities.

Influential Voices and Strategic Moves

Celisa Morin, former Vice President of Platform Distribution at Grayscale and now head of Reed Smith’s on-chain crypto group, emphasized the significant narrative shift towards public blockchains. In an interview with Cointelegraph, Morin remarked, "I think we see a preference for private chains with JPMorgan’s Onyx. But I do think that this was the narrative a few years back. Now, I think it's very much the public blockchains."

Morin's insights reflect a broader consensus among TradFi firms about the advantages of public over private blockchains for asset tokenization. The public nature of these blockchains offers unprecedented transparency, wider participation, and enhanced security features—qualities that are becoming increasingly valued in the financial sector.

Forward-Thinking Institutions

Other financial giants are also making headway in this area. Franklin Templeton, for example, launched its tokenized money market fund on the Stellar Network in 2021, later integrating with the Ethereum layer-2 scaling solution Polygon. This move not only highlights the firm's innovative approach but also its commitment to leveraging public blockchain technology to improve financial services.

The trajectory of blockchain adoption by traditional financial institutions is clear: public blockchains are becoming the preferred choice for their transparency, security, and increased interoperability. As more firms follow the lead of BlackRock and Franklin Templeton, we may witness a new era in financial services where public blockchains play a central role in asset tokenization and beyond. This trend underscores a growing acknowledgment within the TradFi sector that public blockchains offer a scalable and efficient platform for the evolving demands of modern finance.

Entra en la nueva economía tokenizada

Enter the new tokenized economy

Token City is the ultimate bridge to the tokenized economy (tEconomy), in which tokenized companies (tEnterprises) create their cryptoasset markets (tMarkets), open to global investors (tCitizens).

Related news