Given the strong opposition the blockchain industry faced from the traditional financial (TradFi) institutions, the current intersection of blockchain and TradFi sparks optimism and surprise. Traditional institutions are beginning to recognize how blockchain can enhance their services. Recently, Newmarket Capital CEO Andrew Hohns revealed that Bitcoin-backed loans mitigate some risks associated with traditional lending. There is also the billion dollar purchase of Bridge by Stripe, PayPal enabling crypto transactions, and the partnership between Visa and Coinbase.
Moreso, there are claims within the crypto community that Bank of America has filed 83 patents around Ripple and uses the Ripple token (XRP) for all internal transactions. The institution’s CEO Brian Moynihan even said that the bank is open to crypto payments, but with a caveat: regulations must permit. Like Moynihan, Morgan Stanley CEO Ted Pick underscored the importance of balancing innovation and regulation. Pick acknowledged the transformative potential of cryptocurrencies in financial services but emphasized the need for robust regulatory frameworks to manage risks and ensure market stability.
The opinions of these two corporate leaders highlight the fact that though the TradFi ecosystem is ready to embrace blockchain, regulation still remains a great concern. Over the years, the crypto industry has met tightened regulations and punitive measures in different jurisdictions. The industry incurred a staggering $5.8 billion in AML fine in 2023, surpassing penalties incurred by other sectors. That same year, the European Union introduced its Markets in Crypto-Assets Regulation (MiCA).
MiCA served as a backdrop for countries like Italy to hike crypto taxes. Last October, Italy increased crypto taxes from 26% to 42% not only as a strategy to address its fiscal debt, but also as a method to strengthen regulatory oversight. Currently, the European Security and Markets Authority is pushing for MiCA to include even stricter AML measures and more compliant requirements like mandatory sender and beneficiary identification for all crypto transactions and wallet ownership verification for self-hosted wallets holding more than 1,000 euros.
Amid this global regulatory scrutiny, the U.S. has taken a contrasting approach under President Trump’s administration. On January 23, 2025, an executive order was signed, designating cryptocurrency as a national priority. The directive establishes the President’s Working Group on Digital Asset Markets to evaluate policies supporting the industry, including the potential creation of a national digital asset stockpile. It emphasizes protecting developers, miners, validators, and self-custody asset holders while ensuring fair banking access for law-abiding individuals and entities.
Overall, traditional financial institutions are now more open to embracing blockchain technology, creating a tangible pathway for crypto builders to shape the future of finance. This presents an opportunity for projects like Graphite Network, Versana, Canton Network, Welf, and Fnality to offer innovative solutions, whether through infrastructure or even legal frameworks, that effectively connect TradFi and DeFi.
Graphite Network: Bringing Traditional Banking and DeFi Together With the Bank Integration Initiative
Graphite Network is not waiting for TradFi institutions to come to them; they are meeting these institutions where they are. It provides compatible, foundational infrastructure for banks to start engaging with blockchain technology and offering crypto through its recently announced Bank Integration Initiative. Also, it addresses the common challenges that may accompany the transition such as scalability, trust, and interoperability.
In a TradFi ecosystem, trust is key, and Graphite Network stands out by putting user reputation at the center with its reputation-based architecture, setting it apart from others in the blockchain space. Through the following features, it delivers a secure and credible platform for institutions and users, where privacy and transparency are both prioritized.
First off, Graphite Network introduces an efficient account verification system whereby users activate their wallets with a small fee. Its “One User, One Account” policy reduces congestion from inactive accounts and minimizes the creation of fraudulent wallets. Next, it is setting a new standard that merges blockchain transparency and TradFi trust through its innovative ZK-Proof built-in multi-tiered KYC processes. This means institutions can verify user information such as their age or location in a non-intrusive way and without exposing sensitive data. Furthermore, Graphite Network’s Trust Score enhances security by providing users with a credibility rating that takes factors like KYC status, transaction history, account age, and several more into account, allowing a quick way to judge if someone can be trusted.
Notably, with Graphite Network, banks and other TradFi institutions can explore reputation-driven smart contracts to, for example, provide loans only to users that meet predefined reputation criteria that can be verified on-chain. Soon, it will also introduce tagged addresses that will link funds to specific purposes, like charity. If a wallet misuses those funds, it’ll be flagged to keep things transparent. All these reputation-based features work together to reduce fraud and ensure a safe, supportive space for all Graphite Network users.
Finally, Graphite Network is the only blockchain out there that offers integrators, both authorized and entry-point (transport) nodes, earning possibilities through its innovative reward system. This ensures that participants can earn directly from the blockchain, regardless of their resources, and get rewards in the network’s native token, @G, used for transaction fees, wallet activation, and more. By showing the network a token is tied to, the @G Ticker System eliminates confusion and ensures transparent, traceable transactions for banks.
Versana: Streamlining Syndicated Loans
Versana is primed to bring solutions to the $5 trillion corporate loan market. The market is challenged by poor data quality, redundant processes, and lack of innovation. This is the reason Versana – the most credible source of syndicated loan data – is bringing a transparent, efficient, and fast way to operate syndicated loans, a crucial segment of TradFi.
Syndicated loans often rely on manual and cumbersome processes with the average settlement times exceeding 20 days. Since large corporations depend on syndicated loans, the inefficiency hampers them from responding swiftly to dynamic economic conditions. With Versana, institutions’ reference data is captured in real time. There is also transparency in loan-level details and lender portfolio positions.
Backed by TradFi titans such as J. P. Morgan, Bank of America, Citi, and Credit Suisse, Versana streamlines workflows, bringing all TradFi institutions in a unified industry-backed ecosystem. These institutions can enjoy faster settlements, enhanced portfolio tracking, and seamless collaborations. This is particularly important as TradFi shifts towards blockchain merits such as transparency, while operating within regulatory frameworks.
Fnality: Traditional Security Meets Digital Efficiency
Backed by an alliance of key global banks, Fnality leverages blockchain technology to provide a modern way for payments, especially wholesale payments. It presents central bank money as a digital token for real-time settlements, thus unlocking the institutional potential of tokenized finance.
Fnality facilitates transactions through a decentralized payment network called Distributed Ledger Technology (DLT), making real-time, peer-to-peer transactions using central bank money. For context, TradFi markets have accepted this technology and its potential for transforming traditional finance. Regulations like the EU DLT pilot regime provide a legal framework that allows the use of DLT in the securities market. The Bank of England (BoE) also launched an omnibus account model that enables real-time gross settlement (RTGS) service that integrates innovative payment systems including DLT. It is on this foundation that Fnality launched its Pound Sterling Fnality Payment System. The system uses a Proof-of-Authority consensus that allows it to operate effectively without mining, thus eliminating intensive energy consumption.
These features enable Fnality to unknot the several bottlenecks present in TradFi, including high transaction costs, settlement delays, and cross-border payment inefficiencies. Fnality bridges blockchain and TradFi by ensuring that transactions are backed by central bank reserves. Hence, it builds the trust and stability needed by traditional financial institutions to embrace blockchain systems. (This is analogous to how crypto users find trust and stability in stablecoins because they are backed by fiat currencies.)
Just like Layer 2 networks leverage Ethereum’s security while reducing transaction times, Fnality leverages central bank security to process transactions on-chain. This sets a new standard for payments and accelerates the adoption of innovative blockchain solutions in highly regulated financial markets.
Canton Network: Deconstructing TradFi Silos
Interoperability is one of the strongest features of the blockchain ecosystem. Different blockchains can seamlessly interact and share information with another. This is in contrast to the TradFi ecosystem with siloed institutions. Banks rely on separate ledgers to settle interbank payments, leading to discrepancies and delays. This is in addition to the delays faced during cross-border payments since these banks rely on intermediaries within their network.
Canton Network, however, solves the interoperability problem between these insular systems, while maintaining regulatory compliance. As the first privacy-enabled blockchain network, it unites institutions by providing an open, privacy-enabled blockchain infrastructure. This infrastructure allows these institutions to secure data and synchronize transactions while maintaining strict privacy requirements.
By connecting financial institutions to a single network, Canton Network enhances operational efficiency, enables asset servicing, issuing securities, and trading across platforms. It strikes a balance between blockchain’s transparency and TradFi’s confidentiality.
Welf: Redefining Wealth Management
Utilizing the security and architecture of blockchain technology, Welf provides private banking as it provides tailored wealth management services. It safeguards client assets while ensuring compliance with regulatory standards. Welf offers clients a comprehensive experience through familiar banking channels and new investment opportunities that allow them to grow and protect their wealth across digital and TradFi systems.
Welf offers these services through its bespoke products like WelfTailor and WelfBank. The former is a customized portfolio management service tailored to cater to clients’ investment goals and risk appetites. WelfBank, on the other hand, is an advanced banking service for high-net-worth individuals that integrates traditional and digital banking functionalities. Through WelfBank, clients can manage their wealth with greater flexibility and efficiency.
In addition, other innovative products like WelfYield provide diversified income solutions and empower clients to achieve their financial and lifestyle aspirations while navigating the complexities of the dynamic financial landscape.
To a Unified Financial Future
The integration of blockchain into TradFi is no longer a pipe dream but an unfolding reality. As TradFi grapples with challenges of scalability, regulatory compliance, and trust, innovative projects like Graphite Network, Versana, Canton Network, Fnality, and Welf are proffering solutions to these challenges.
These solutions address regulatory hurdles, streamline inefficiencies, and build trust-driven ecosystems, providing veritable portals for TradFi institutions to embrace blockchain and creating a unified financial system where the best of both worlds exist.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
