DeFi expected to take over financial ecosystem

At Sibos 2025 in Frankfurt, speakers Tobias Adrian, head of capital markets at the International Monetary Fund (IMF); Sarah Hammer, managing director at Charles Schwab; Erica Kostelijk, head of transaction banking at ABN AMRO Netherlands; Sopnendu Mohanty, co-founder and CEO of Global Finance and Technology Network (GFTN); and Sergey Nazarov, founder and CEO of Chainlink Labs, spoke on the panel ‘Defining ethics, trust, and control in a new financial order’.

Nazarov kicked off the discussion on the evolving order of the financial ecosystem by outlining three key points of dynamic change:

1. A shift to a parallel financial ecosystem that will be dominated by real-world assets, stablecoins, and tokenised funds.
2. A different dynamic around trust – no longer focused on institutional brand reputation, but technologically-derived trust proven through the efficacy of their offerings. (He provided Credit Suisse as an example where reputation did not prevent failure).
3. A huge reduction in onboarding costs and complexity will make it easier to onboard onto financial institutions.

Nazarov explained: “The percentage of cryptocurrencies versus real-world assets like stablecoins or tokenised funds will get reversed. 90% of the ecosystem will be real world assets, stablecoins, tokenised funds. Forms of payments and assets the traditional financial sector cares about is what the blockchain industry is going to turn into. The parallel financial industry created by the blockchain industry will become a version of a parallel system to the TradFi world.”

Adrian went on to define several pillars that should serve as the foundation of finance and technology to build trust. “We are seeing the world changing every day. Governments are issuing tokenised bonds, banks are experimenting with tokenised deposits, asset managers are tokenising money, market funds, ETFs and central banks are doing experiments on tokenising central bank money.

“There’s no question that the existing financial system is being deeply influenced by these technologies. I would particularly emphasise the importance of market infrastructures. Infrastructures such as Swift and many other infrastructures, some of which are existing, others are emerging, are really foundational for the current financial system that’s being built around tokenisation and blockchain technology,”

1. A sound legal foundation is essential to maintain trust, governance frameworks are required to manage technology.
2. Governments and regulators need robust macroeconomic and fiscal frameworks to maintain control when changes in the financial system impact macroeconomic activity.
3. Regulatory approaches need to have certainty.

Adding to Adrian’s point on market infrastructure, Hammer referred to her experience speaking on a US Senate banking committee on digital assets, where she conducted research on stablecoin usage and growth, and looked at other global regulatory frameworks on stablecoin. She stated that looking at a variety of frameworks, they each have a taxonomy for digital assets, they provide regulation for service providers and details for requirements on custody and wallet security, among others.

“The hearing is Singapore’s framework, which I found very clear, because it lays out guidance on compliance controls around money laundering and other components of their regulatory framework. At a high level, the US has more work to do, and is working on enacting a crypto market structure piece of legislation. While we now have a law for stablecoins, we’re working towards something on the rest of the world of digital assets. In the meantime, we have our financial regulatory agencies, like the SEC and the CFTC, which recently held the first joint roundtable in quite a long time, to talk about regulation of digital assets. I’m a proponent of right sizing the regulatory framework, having strong and clear rules and guidelines for the players, and enabling those beneficial parts of the digital assets framework that the panel is talking about today.”

Kostelijk added that there is a lot of excitement around opportunities for blockchain and tokenisation in the ecosystem, however there will be an impact on trust, and it is significant to provide that explainability to understand what is happening and how digital currencies work.

Commenting on the digital euro, she said: “Explaining what the digital euro will be compared to money in the bank or cash at hand will be a complex issue or will require a lot of repetition. Still, I don’t know if they really understand because all it should be about is: can I still pay: Can I participate? Whatever happens, do I have access to my money, especially in the geopolitical environment we are in? How can it help me if there’s a disturbance, cyber-attack, or power outage? That’s what in the end, our customers will be looking at.”

Mohanty responded to a query on quantum, stating that APIs, digital infrastructure, and cloud have defined the banking sector in the last decade, but what is next? He described the shift from the previous decade’s technology stack to that of the next decade: AI, tokenisation, and quantum. Going into more detail, Mohanty explained that AI will be able to enhance operations and front-end processing, and tokenisation can streamline liquidity and asset management processes. Quantum, however, is tricky because of the need for quantum-proof encryptions.

Mohanty continued: “Today’s internet is largely compromised. All the bad actors have already harvested every ID password you have in the world. They are looking to decrypt. Once the quantum machine hits the market, they’ll get it. So, you have to change the fundamental internet encryption standard to ensure when the systems move into that infrastructure, the underlying differences are protected, and that’s why you need to talk about quantum-proof encryption standards.”

Hammer agreed with Mohanty’s points, and added that they need to figure out how to have a truly safe and secure environment for tokens. As the panel came to a close, Nazarov spoke on resolving the issue of global fragmentation by facilitating interoperability between DeFi systems and traditional systems, the panelists agreed on the significance of resolving this issue.