The End of the 'Disrupting Wall Street' Narrative: The Shift of the Crypto Sector Towards Financial Infrastructure

Crypto companies are no longer trying to replace Wall Street but are instead charging Wall Street institutions for technology services.

Written by: Prathik Desai

Compiled by: Luffy, Foresight News

Last year, the securities transaction settlement handled by one institution reached $47 trillion, exceeding 35 times the total global GDP. This month, the institution — the Depository Trust & Clearing Corporation (DTCC) — officially began using blockchain technology to process related transactions.

The most important upgrade in the global financial industry today centers on infrastructure iteration. Clearinghouses are not the only players entering the field; cross-border messaging collaboration agencies connecting over 10,000 banks globally and card payment networks covering 200 million merchants are all reconstructing the underlying system of asset circulation, with blockchain becoming a core component of this upgrade.

Traditional industries that once long rejected the crypto sector are now accelerating the adoption of underlying channels for crypto assets.

This article will analyze why traditional finance is embracing crypto infrastructure as a backend and the role crypto companies play in this industry transformation.

The Dilemma of High Costs

When you buy Microsoft stock on the NYSE today, it nominally still takes a full trading day to complete the legal transfer of ownership. The root of this issue lies in the fact that this stock transfer infrastructure was born in the era of paper stock certificates. It took humanity over 60 years to achieve paperless stocks and speed up the securities trading process, but the funding and asset settlement stages still rely on the underlying architecture designed in the paper era.

This cannot simply be viewed as a convenience issue. The delays in asset and fund transfers continuously generate explicit financial costs.

Take cross-border bank payments as an example: Most global banks need to pre-allocate funds in different countries and currencies to ensure normal clearing of payments across time zones. Banks rely on local deposits and central bank reserves to complete cross-border settlements without waiting for real-time fund transfers during local business hours.

Even the margin paid by securities traders cannot generate any returns while idle. The clearing system stops operating on Friday evenings and resumes on Monday; even if market participants continue trading over the weekend, the rules do not change. This mechanism was not intentionally designed to create inconvenience at its inception, but today, everyone is paying "hidden taxes" for outdated infrastructure, while more efficient and lower-cost alternatives have emerged.

Major exchanges are responding by extending trading hours. The London Stock Exchange has just announced the launch of the LSE 24 trading segment, which will enable uninterrupted trading for 23.5 hours from Monday to Friday starting in the first half of 2027. The CME has launched around-the-clock cryptocurrency futures since May. Nasdaq also plans to introduce daily 23-hour trading services later this year.

While trading hours are being extended, trading clearance remains lagging. Capital continues to be occupied, further burdening traders.

The hidden costs brought by this outdated system are enormous, accounting for over one-fifth of global GDP.

Last year, the total amount of cross-border payments by global enterprises exceeded $30 trillion, generating transaction costs of over $120 billion annually.

Traditional financial infrastructure operators have finally begun to face this cost issue. In July 2026, the industry took a substantial step forward, attempting to replace outdated systems with underlying channels for crypto assets.

The Replacement of Old and New Infrastructure

On July 15, the DTCC, a core pillar of the U.S. financial market, completed its first batch of tokenized securities transactions. The transaction targets included stocks of listed companies, U.S. Treasury bonds, and tokenized assets corresponding to ETFs.

In the first round of on-chain transactions at DTCC, JPMorgan tokenized one of the most liquid ETFs globally — the Invesco QQQ Trust — and submitted it as collateral to the CME. Over 30 institutions, including Goldman Sachs, BlackRock, Vanguard, and the NYSE, participated in this test. These tokens completed repurchase transactions, asset pledges, securities lending, and clearing margin transfers in a production environment.

Only a few months remain until DTCC plans to officially launch tokenized services in October 2026.

This infrastructure upgrade intuitively demonstrates how much economic benefit an efficient system can create for capital markets. By May 2024, the settlement cycle for the U.S. stock market will be shortened from T+2 to T+1. A mere one-day compression will reduce the margin that clearing participants need to hold by $3 billion, a decrease of 23%; the margin will drop from an average of $12.8 billion over three months under the T+2 cycle to $9.8 billion.

Shortening the settlement cycle by one day in a single country's stock market can release $3 billion in idle margin. If cross-border settlements for stocks, U.S. Treasury bonds, repos, and foreign exchange can be compressed to complete in a matter of minutes and break through weekend time constraints, the released capital value will grow exponentially.

This is precisely the value that blockchain can standardize and achieve. Stablecoin transfers can be completed in seconds, with fees of just a few cents, year-round. Tokenized securities can change ownership in real-time, simultaneously serving as collateral without having to wait for the system to open on Monday.

This is the core reason why traditional infrastructure operators are willing to accept crypto underlying channels as a backend. If they cling to the old system, competitors can seize customer resources with lower costs and faster speeds.

Crypto infrastructure eliminates idle capital windows, helping clients' capital operate more efficiently. Securities that can only be settled tomorrow cannot be used as collateral today; tokenized securities can be pledged and lent within minutes around the clock. Whether collateral can flow freely determines whether capital operates intermittently or continuously generates returns.

Just nine days before DTCC's test, the cross-border messaging system SWIFT, connecting over 11,500 financial institutions globally, announced that 17 banks from six continents (including Citigroup, HSBC, UBS, Standard Chartered, and MUFG) will pilot tokenized deposits on a new shared ledger.

Tokenized deposits belong to bank currency and are not subject to business hour constraints. Blockchain supports the normal flow of funds at night and on weekends, with asset rights still belonging to licensed banks. For institutions concerned about the lack of FDIC insurance for stablecoins issued by banks, this is an ideal alternative. Tokenized deposits combine the convenience of stablecoins while operating within the existing regulatory framework.

Even card organizations like Visa are beginning to lay out crypto infrastructure.

On July 16, Cuy Sheffield, head of Visa's crypto lab, announced the launch of a new platform that allows banks to issue, circulate, and redeem stablecoins within their existing fund management systems. The platform shields customers from complex technical details such as private keys, gas fees, and underlying public chains.

The biggest attraction for traditional financial giants to embrace crypto infrastructure as a backend is that they can leverage their vast distribution networks to pass time and cost advantages onto end customers. The Visa network already covers approximately 15,000 financial institutions and over 200 million merchants.

Visa's competitor, Mastercard, is continuously expanding its offerings based on initial pilots and small-scale implementations, providing partner banks with stablecoin settlement options and supporting six regulated stablecoins: USDC issued by Circle, PYUSD from Paxos, USDG, USDP, Ripple's RLUSD, and SoFi's SoFiUSD. These stablecoins will support multiple mainstream public chains, including Arbitrum, Base, Canton, Ethereum, Polygon, Solana, Tempo, and XRPL.

There have already been large-scale implementation cases within banks that demonstrate this infrastructure's commercial capacity. JPMorgan's Kinexys has processed over $40 trillion in transaction volume, with an average daily transfer scale exceeding $7 billion, operating normally even during holidays when traditional financial markets are closed.

Practitioners still skeptical about crypto infrastructure can refer to the blockchain implementation case of money market funds. BlackRock's tokenized Treasury bond fund BUIDL manages approximately $2.5 billion and has already been accepted as collateral by major derivatives trading venues; Standard Chartered has partnered with crypto trading platform OKX to build this operational framework.

This is the real value of crypto infrastructure as a backend; assets can serve as collateral while still earning Treasury bond yields.

If someone asks why the industry needs to adopt crypto asset channels, the above is the most compelling answer.

The most important mission of any financial innovation is to make the flow, appreciation, and storage of funds more efficient.

Many established crypto companies have found a new industry positioning based on such innovations.

From Confrontation to Cooperation: Crypto Companies Transform into Service Providers

Many supporters of crypto-native ideas once envisioned that the crypto industry would completely replace traditional financial institutions. The reality has taken a completely different direction, with crypto companies transforming into the infrastructure builders needed by traditional finance.

Multiple crypto companies collaborated to facilitate the on-chain transaction at DTCC in July. Chainlink was responsible for connecting various networks; Digital Asset's Canton network carried the tokenized U.S. Treasury bond circulation; Fireblocks and BitGo provided custody services; Circle and Ondo designed supporting service solutions for the entire working group.

These companies spent a decade building a parallel financial system and are now assisting traditional financial institutions in creating lower-cost, faster asset transfer infrastructures. Their profit model has completely shifted: they are no longer trying to replace Wall Street but are charging Wall Street institutions for technology service fees.

Such collaborative layouts are spread across the globe. On July 16, Ondo Finance, the world's largest stock token issuer, announced a partnership with Japan's SBI Group to promote the tokenization of Japanese stocks. Tokenized equity will be integrated into the SBI ecosystem, with settlements completed using the yen stablecoin JPYSC issued by SBI.

SBI manages assets exceeding $250 billion. If they were to develop tokenization technology from scratch, the R&D costs would be extremely high. Companies choose to directly procure mature blockchain technology and pay service providers for technology fees. Currently, Ondo holds over 70% of the equity token issuance market share and has established distribution partnerships with Deutsche Börse's Clearstream.

Securitize also plays the role of a technology service provider, supporting the issuance of BlackRock's BUIDL fund.

Future Trends in the Industry

The transformation of the logistics industry can serve as a reference. In 1956, truck driver Malcom McLean invented the standard shipping container. The cost of loading and unloading goods dropped from $5.86 per ton to $0.16, and global trade was restructured around containers. Ironically, shipping companies hardly profited from this. Containers ultimately became standardized commodities, leading the shipping industry into a price war; the real beneficiaries were companies that restructured their business models around low-cost, stable shipping. The biggest beneficiary of container innovation was retail giant Walmart, not logistics giant Maersk.

The fintech sector may replicate a similar script.

For containers to reshape the logistics industry, ports, cranes, freight chassis, and customs systems all need to be upgraded accordingly. Similarly, for tokenization to become widespread, custody, compliance, and cross-chain interoperability systems must be built simultaneously. As the banking settlement layer gradually moves towards standardization, value will converge towards the supporting ecosystem, which is precisely the track that Chainlink, Fireblocks, and Digital Asset are targeting.

Tokens themselves and underlying public chains find it difficult to continuously capture significant value; returns will concentrate in two major directions.

The first category is platform institutions that access crypto underlying channels. DTCC, SWIFT, and Visa will charge service fees for tokenized settlements, token deposits, and stablecoin businesses, maintaining a model consistent with traditional systems. However, the larger value space lies elsewhere; some institutions are reconstructing fund management systems around around-the-clock atomic settlements, conducting intraday fund dispatching, and improving collateral utilization efficiency to provide the market with uninterrupted operating capital services. The BUIDL fund is a typical case, where assets serve as collateral while continuously earning Treasury bond interest.

After 15 years, the crypto industry has built a parallel financial system with superior performance. Visionary crypto builders should stop repeatedly creating similar terminal financial products. The greater victory for the crypto sector is to become the underlying infrastructure, making the cost of fund circulation lower and the speed faster.