Original author: Token Dispatch and Thejaswini MA
Original translation: Block unicorn
Preface
There comes a moment in every industry when old enemies suddenly realize they are fighting the wrong war.
In finance, this moment arrived quietly in 2025, not through a grand announcement but through a series of seemingly unrelated corporate initiatives that heralded a profound shift: the end of the traditional finance (TradFi) versus decentralized finance (DeFi) standoff.
For 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 the realm of instant settlement, 24/7 operation, and permissionless innovation. They speak different languages, follow different principles, and are suspicious of each other.
We all know about that acquisition spree:
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 an ideological battle but because both sides have finally understood what they were missing.
change
Kraken announced that they will soon launch tokenized versions of Apple, Tesla, and Nvidia stock — backed 1:1 by actual shares held — and trade 24/7 on the Solana blockchain.
Not crypto derivatives. Not synthetic exposure. Real stocks, just freed from the constraints of traditional market hours.
This statement laid the groundwork.
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 of this global, 24/7 operating company can only be traded during narrow windows of lucid time in 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 stocks, same regulatory protections, same underlying ownership. Just programmable.
The impact goes far beyond extended trading times. 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 eliminates these friction points while retaining the core value proposition of equity ownership.
But there’s a reason 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 restricted entry points into the U.S. stock market.
This is how the TradFi-DeFi bridge actually works. 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.
What started as a fierce competition has now led us to here, with banks joining forces to create a stablecoin:
This convergence is accelerating, transcending the initiatives of individual companies.
This is a strategic shift from the tentative, individual experiments that banks have been conducting in the crypto space over the past few years. Instead of competing alone in unfamiliar territory, they are pooling resources to build a shared infrastructure to challenge existing stablecoin leaders.
Infrastructure enlightenment
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 stress. Transactions stop when people need them most. Meanwhile, DeFi protocols are already processing billions of dollars in transactions, settling in milliseconds, operating 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 they would offer tokenized US stocks on Solana that trade 24/7, they weren’t trying to replace the stock market. They were simply asking a simple question: Why should Apple’s stock stop trading just because New York fell asleep?
This question is also driving R3’s collaboration with the Solana Foundation to bring $10 billion in traditional assets from institutions like HSBC and Bank of America to a public blockchain.
They are not abandoning traditional finance. They are expanding it beyond the limits of geography and time zones.
Liquidity epiphany
DeFi’s dirty secret is equally glaring: despite its innovation, it is extremely lacking in institutional capital. Retail traders and crypto natives can only provide limited liquidity.
Real money is still trapped behind regulatory barriers. The breakthrough happened when both sides stopped trying to change each other and started building a translation layer. Stablecoins became the Rosetta Stone.
Everything changed when institutions discovered that they could hold USDC without the volatility of cryptocurrencies while still reaping the benefits of DeFi.
When DeFi protocols realized they could access traditional liquidity pools through regulated custodians, barriers began to crumble. Stablecoin trading 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.
Composability Fusion
What is happening is a fundamental reshaping of financial services. Traditional finance has always been fragmented.
Your bank account doesn’t talk to your brokerage account. Your insurance policy can’t interact with your portfolio. Your retirement fund operates independently from your daily spending. DeFi introduces something revolutionary: composability. The ability to seamlessly combine different financial primitives.
Provide liquidity, earn yield, use those yields as collateral, deploy borrowed funds into another strategy — all in one transaction. This composability is now something that traditional institutions are beginning to envy.
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 using tokenized shares to rebalance around the clock 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 limited. 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’re after is an efficiency arbitrage that benefits everyone: institutions gain 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 has changed is how companies handle compliance.
The clearest signal of regulatory momentum came 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 — they’re just unregulated. I think if we provided legal clarity and a legal framework for this, we could create trillions of dollars of demand for our national debt almost overnight, very quickly.”
Data supports Sacks’ optimism. Tether alone holds nearly $120 billion in U.S. Treasuries, making it the 19th-largest holder in the world — ahead of Germany. The GENIUS Act, which requires stablecoins to be fully backed by U.S. Treasuries or dollar equivalents, passed a key procedural vote with bipartisan support of 66 to 32.
Instead of building crypto-native systems and hoping regulators adapt, they are designing blockchain platforms with institutional compliance in mind from day one.
This regulatory easing explains why major banks are suddenly comfortable with tokenization projects. They are embracing programmable infrastructure using blockchain technology — not just cryptocurrencies.
User Experience Revolution
Traditional finance has made people accept that blockchain technology has proven to be unnecessarily restrictive. If blockchain transactions can be completed in seconds, why does an international wire transfer take three business days?
Why should markets close when global demand is running around the clock?
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 not just about institutional adoption or technological innovation - its about building a financial infrastructure that truly serves user needs, rather than being constrained by traditional limitations.
When Kraken offered tokenized stocks that trade 24/7, they did more than just add a product feature. They showed how expansive the possibilities are when you no longer accept artificial constraints as a permanent reality.
What makes this fusion particularly powerful is that it creates a positive feedback loop.
As more traditional assets move onto blockchain rails, the value of these networks increases for everyone. As more institutions participate in DeFi protocols, these protocols 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 the 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 View
The great financial reconciliation of 2025 represents more than just technological convergence. It is the 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 focuses on scale, compliance, and stability. DeFi prioritizes innovation, accessibility, and efficiency. Both are right about what they value, but neither is complete. Breakthroughs occur when companies stop trying to prove one approach is superior and start building systems that combine the best of both worlds.
Ripple didn’t acquire Hidden Road to prove the superiority of cryptocurrency — they did it because hybrid infrastructure creates more value than any single approach. This pragmatic blend is exactly what the financial industry needs. Traditional finance, lacking innovation, is increasingly becoming obsolete.
DeFi without institutional adoption remains a scarce resource in a niche market. But if the two are combined intelligently, they can create something that neither approach can achieve: 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 does not belong to TradFi or DeFi, but to companies that can remove the friction between people’s needs and the tools available to them.
The 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.
