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The digital asset market is undergoing a profound structural shift. Growth is increasingly driven by the mainstream adoption of stablecoins rather than the speculative cycles traditionally associated with crypto tokens. Total stablecoin transaction volumes jumped 72% to $33 trillion in 2025 according to data provider Artemis Analytics. Stablecoins which are effectively tokenized conventional FIAT currency, today are primarily used in the form of digital US dollars. Represented as tokens which are recorded on a permissionless distributed ledger, commonly referred to as blockchain. It is the identical infrastructure that popular native crypto tokens such as Ether or Solana run on.
While market participants differentiate between “crypto” and “tokenized finance,” the underlying technology is the same. Consequently, the methodologies, technical expertise, and specialized tooling developed within the cryptocurrency sector are now being directly applied to stablecoins and, increasingly, to a broader range of tokenized financial instruments.
This technological transition is championed by global finance leaders who express their visions, including Larry Fink, CEO of BlackRock, who has consistently framed this shift as a fundamental upgrade to market infrastructure, stating:
“We believe the next generation for markets and next generation for securities will be the tokenization of financial assets.”
The sentiment was echoed at the World Economic Forum 2026 in Davos, where UBS CEO Sergio Ermotti drew significant attention by asserting:
“Blockchain is the future for traditional banking… you will see a convergence between the two systems.”
Simultaneously, the NYSE is launching a 24/7 blockchain-powered platform for equities and ETFs to enable instant settlement and liquidity outside banking hours. Meanwhile, European players like Bitpanda are integrating traditional securities, further merging the VASP and TradFi sectors.
What we are currently witnessing is the convergence of the TradFi industry, specifically banks and traditional asset managers with Virtual Asset Service Providers (VASPs). VASPs were built natively to facilitate the exchange of value on-chain, whether in the form of crypto assets, stablecoins, or tokenized instruments. The common denominator remains the tokenized asset residing on a distributed ledger, most frequently a public one.
While traditional institutions are navigating how to integrate this infrastructure into legacy regulatory frameworks, VASPs are rapidly scaling their operational resilience to meet institutional standards for compliance, security, and aftercare. Both sectors understand that this path is no longer optional. The opportunities for efficiency and market reach make the transition unavoidable.
It is important to note that regardless of your institution’s specific digital asset strategy, every bank and traditional asset manager will be confronted by these changes as clients increasingly interact with on-chain wealth. Onboarding processes, including Anti-Money Laundering (AML) and Source of Wealth (SoW) checks, must adapt to verify the origins of funds.
Currently, forward-thinking institutions resort to a growing landscape of blockchain intelligence providers to run automated checks. However, it is critical to recognize that these providers differ in Data Depth, Methodologies applied and functionality offered.
In the specialized field of Investigations and Recovery, where assets have been compromised, it has become a market standard to use a minimum of two, often three distinct providers to cross-check but also complement findings.
Furthermore, automated risk scores cannot function as a “black box.” For evidence to hold up in court, there must be clear explainability, auditability, and thorough documentation of the decision-making process. Analogues, compliance is shifting toward a robust risk-based approach, proving to regulators that an institution has done the maximum possible, rather than the bare minimum.
In alignment with this shift, we expect EU regulators throughout 2026 to leverage the Markets in Crypto-Assets Regulation (MiCA) framework to hold VASPs to the rigorous operational standards historically reserved for Tier-1 financial institutions. Swiss FINMA, German BaFin, and Austrian FMA are now proactively defining institutional assurance standards through direct industry consultation.
As MiCA enforcement intensifies, institutions currently managing digital assets must significantly elevate their risk management protocols. This trend is already gaining momentum in the U.S., where a prominent crypto exchange launched a first-of-its-kind Incident Response and Aftercare protocol, mirroring the operational resilience standards of traditional banking.
Once banks and asset managers achieve the necessary infrastructure to onboard digital-asset-originated wealth, the seamless integration of tokenized deposits and withdrawals will become inevitable. Consequently, robust Digital Asset Incident Response and Aftercare capabilities will transition from a niche requirement to a fundamental industry standard for the entire TradFi sector.
At that point, the convergence will be complete. We are going to see a unified industry where institutions compete across the entire spectrum of financial services. As Sergio Ermotti suggested, jurisdictions and regulators must act now to position themselves as competitive hubs for the financial industry of the future.
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