The Great Financial Reconciliation

Article author:Token Dispatch and Thejaswini M A

Article compilation：Block unicorn

Foreword

There comes a moment in every industry when old enemies suddenly realize they are fighting the wrong war.

In finance, that moment arrived quietly in 2025, not through a grand announcement, but through a series of seemingly unrelated corporate initiatives, heralding a profound shift: the end of the confrontation between traditional finance (TradFi) and decentralized finance (DeFi).

For many years, these two financial ecosystems have operated like parallel universes. Traditional finance (TradFi) lives in a world of T+2 settlement, banking hours, and regulatory compliance.

Centralized finance (DeFi) exists in a world of instant settlement, 24/7 operations, and permissionless innovation. They speak different languages, follow different principles, and are suspicious of each other.

We all know about the acquisition frenzy:

• Ripple → Hidden Road: $1.25 billion (April 2025)

• Stripe → Bridge: $1.1 billion (February 2025)

• Robinhood → Bitstamp: $200 million (June 2024)

But something fundamental has changed. The rigid boundaries are melting, not because either side has won the ideological battle, but because both sides have finally understood what they were missing.

The Shift

Kraken announced that they will soon launch tokenized versions of Apple, Tesla, and Nvidia stock — backed 1:1 by actual shares held — and traded 24/7 on the Solana blockchain.

Not crypto derivatives. Not synthetic exposure. Real stocks, just freed from the constraints of traditional market hours.

This announcement planted the seeds.

Think about it. Apple generates revenue every second from App Store purchases in Tokyo, iCloud subscriptions in London, and iPhone sales in Sydney. Yet the shares that represent ownership in this global, 24/7 operating company are traded only during narrow windows of lucid Manhattan.

Kraken’s xStocks — developed in partnership with Backed and issued as SPL tokens on Solana — don’t solve this problem through clever financial engineering. They solve it by eliminating the problem entirely. Same shares, same regulatory protections, same underlying ownership. Just programmable.

The implications extend far beyond extended trading hours. These tokenized shares can be used as collateral in DeFi protocols, combined with other assets in automated strategies, and transferred across borders instantly. Traditional brokerage firms require separate accounts, different compliance processes, and settlement delays. Blockchain infrastructure removes these friction points while preserving the core value proposition of equity ownership.

But here’s why this is particularly important: Kraken isn’t targeting crypto enthusiasts who want to trade Tesla stock at 3 a.m. They’re targeting institutional and retail investors outside the U.S. who face expensive, slow, and limited entry to the U.S. stock market.

This is what the TradFi-DeFi bridge actually does. It’s not cryptocurrencies trying to replace traditional assets, but blockchain infrastructure extending traditional assets beyond their traditional limitations. And this is just the beginning.

It started with fierce competition, and now we’re here, with banks joining together to create stablecoins:

This convergence is accelerating beyond the initiatives of individual companies.

This is a strategic shift from the tentative, solo experiments that banks have been conducting in crypto over the past few years. Instead of competing alone in unfamiliar territory, they are pooling resources to build shared infrastructure to challenge existing stablecoin leaders.

The revelation of infrastructure

Traditional finance has been battling a dirty secret: their infrastructure is breaking under the weight of global demand. Cross-border payments still take days. Settlement systems fail under market pressure. Transactions stop when people need them most. Meanwhile, DeFi protocols are already processing billions of dollars in transactions, settling in milliseconds, working seamlessly across borders, and maintaining uptime.

The real revelation is not that DeFi is “better” — it’s that DeFi solves problems that traditional finance didn’t even realize it could solve.

When Kraken announced that they would offer tokenized U.S. stocks on Solana for 24/7 trading, they weren’t trying to replace the stock market. They asked a simple question: Why should Apple’s stock stop trading just because New York fell asleep?

The same question that’s driving R3’s work with the Solana Foundation to bring $10 billion of traditional assets from institutions like HSBC and Bank of America to a public blockchain.

They’re not abandoning traditional finance. They’re extending it beyond the limits of geography and time zones.

The Liquidity Epiphany

DeFi’s dirty secret is equally compelling: for all its innovation, it’s starved of institutional capital. Retail traders and crypto natives can only provide limited liquidity.

The real money is still trapped behind regulatory barriers. The breakthrough happened when each side stopped trying to change the other and started building a translation layer. Stablecoins became the Rosetta Stone.

When institutions discovered they could hold USDC without the volatility of crypto, while still getting the yield of DeFi, everything changed.

When DeFi protocols realized they could tap into traditional liquidity pools through regulated custodians, barriers began to crumble. Stablecoin volume is expected to exceed $3 trillion per year by 2025, driven not by speculation, but by institutions using it as a bridge between old and new financial rails.

Composable Convergence

What’s happening is a fundamental reshaping of financial services. Traditional finance has always been siloed.

Your bank account doesn’t talk to your brokerage account. Your insurance policy doesn’t interact with your portfolio. Your retirement fund operates independently of your daily spending. DeFi introduces something revolutionary: composability. The ability to combine different financial primitives seamlessly.

Provide liquidity, earn yield, use those yields as collateral, deploy borrowed funds into another strategy — all in one transaction. Now, traditional institutions are beginning to envy this composability.

Imagine a corporate treasury department that automatically optimizes between traditional money market and DeFi yield strategies based on risk-adjusted returns.

Or a pension fund that rebalances around the clock using tokenized shares while maintaining custody through a regulated provider. These scenarios are no longer hypothetical. Today, companies that understand that the future belongs to hybrid systems are building such infrastructure.

Ultimately, the convergence of TradFi and DeFi is driven by an efficiency arbitrage that can’t be ignored. Traditional finance excels at scale, regulatory compliance, and institutional trust. But it’s slow, expensive, and geographically constrained. DeFi excels at speed, automation, and global accessibility. But it lacks institutional adoption and regulatory clarity.

The companies that win in this convergence are those that combine the best of both worlds: institutional-grade compliance with blockchain efficiency, regulatory oversight with global accessibility, traditional scale with programmable automation.

When R3 moved $10 billion of traditional assets onto Solana, they were not making an ideological statement.

What they were pursuing was an efficiency arbitrage that benefits everyone: institutions get faster settlement and global accessibility, while blockchain networks gain the liquidity and legitimacy they need to scale.

Regulatory Settlement

The most important shift is happening at the regulatory level. The adversarial relationship between regulators and cryptocurrencies is evolving into something more nuanced: cautious collaboration. The SEC’s approval of a Bitcoin ETF is a signal that regulators are ready to work with crypto innovation, not suppress it.

The Financial Innovation and Technology Act of the 21st Century (FIT 21) and proposed stablecoin legislation provide institutions with the clarity they need to operate in both worlds. But what changes is how companies handle compliance.

The clearest signal of regulatory momentum comes from David Sacks, the White House crypto chief, who told CNBC that the GENIUS Act stablecoin bill could unleash huge institutional demand:

"We already have over $200 billion in stablecoins — just unregulated. I think if we provide legal clarity and a legal framework for this, we could create trillions of dollars of demand for our treasuries almost overnight, which is very fast."

The data supports Sacks' optimism. Tether alone holds nearly $120 billion in U.S. Treasuries, making it the 19th largest holder in the world — more than Germany. The GENIUS Act, which passed a key procedural vote with bipartisan support of 66 to 32, requires stablecoins to be fully backed by U.S. Treasuries or dollar equivalents.

Instead of building crypto-native systems and hoping regulators adapt, they are designing blockchain platforms with institutional compliance from day one.

This regulatory easing explains why major banks are suddenly comfortable with tokenized projects. They are embracing programmable infrastructure using blockchain technology — not just cryptocurrencies.

The User Experience Revolution

Traditional finance has already made people comfortable with the restrictions that blockchain technology has proven to be unnecessary. Why does an international wire take three business days when blockchain transactions can be completed in seconds?

Why should markets close when global demand operates 24/7?

Why does accessing different financial services require different accounts, different platforms, and different compliance processes?

The convergence of traditional finance (TradFi) and decentralized finance (DeFi) is about more than institutional adoption or technological innovation—it’s about building financial infrastructure that truly serves the needs of its users, rather than being constrained by the limitations of legacy.

When Kraken offered tokenized stocks that trade 24/7, they did more than just add a product feature. They showed how expansive the possibilities become when you no longer accept artificial constraints as a permanent reality.

What makes this convergence particularly powerful is the positive feedback loop it creates.

As more traditional assets move onto blockchain rails, the value of these networks increases for everyone.

As more institutions participate in DeFi protocols, they become more stable and liquid.

These network effects explain why convergence is accelerating rather than evolving slowly. Early movers aren’t just gaining first-mover advantage — they’re helping to create standards and infrastructure that everyone else must adopt.

The tokenization of real-world assets is the most direct manifestation of this convergence. When Boston Consulting Group and Ripple predicted that the tokenization market could reach $18.9 trillion by 2033, they were describing the infrastructure of a post-tribal financial system.

Our Take

The Great Financial Reconciliation of 2025 represents more than just technological convergence. It’s a triumph of pragmatism over ideology.

For years, the TradFi vs. DeFi debate has been like watching two groups of people arguing about different issues.

Traditional finance is focused on scale, compliance, and stability. DeFi prioritizes innovation, accessibility, and efficiency. Both are right about what they value, but neither is complete. The breakthrough happens when companies stop trying to prove one approach is superior and start building systems that combine the best of both.

Ripple didn’t acquire Hidden Road to prove the superiority of cryptocurrencies — they did it because hybrid infrastructure creates more value than any single approach. This pragmatic convergence is exactly what the financial industry needs. Traditional finance, lacking innovation, is increasingly obsolete.

DeFi without institutional adoption remains a scarce resource in a niche market. But combining the two smartly can create something that a single approach can’t: an efficient, accessible, compliant, and globally scalable financial infrastructure. The companies that win this convergence are those that build the best bridge.

They understand that the future doesn’t belong to TradFi or DeFi, but to those that can remove the friction between what people want and the tools available to them.

This great financial reconciliation is about building a system that allows the best of both sides while making their limitations irrelevant. Judging by the infrastructure being built today, this future is coming sooner than ideologues on either side expect.