The bank for international establishments (BIS) says that the tokenization of real assets (RWAS) on blockchains will develop stronger links between crypto and traditional finance (tradfi).
In a new article on the risks of financial stability of the crypto, BIS analysts claim that RWAS – or the tokenization of traditional assets on distributed books – create an increased connection between Tradfi and decentralized finance (DEFI).
If the trend continues, the bis says that more and more assets will be exchanged in the Defi ecosystem, to the point that “the self-referential nature of Defi will become a characteristic of the past”.
Such a development would probably make infrastructure infrastructure much more common than it is today, explains Bis.
“A set of much wider institutions could start to participate and a number of infrastructures which are currently specific to DEFI, such as DEX (decentralized exchanges), will be part of the dominant current.
Due to these changes, not only will existing connections increase in size, but they will evolve difficult to foresee. There may already be connections in areas that are not immediately obvious. For example, the engines of banking stress of March 2023 are difficult to identify exactly. But the indirect exposure of American banks to depositors with large participations in the cryptographic markets was a contributing factor that has surprised many decision -makers and supervisors. »»
The international financial institution calls for more research and a more in -depth examination of the regulation of the link between DEFI and Tradfi in order to repress the potential risks of stability in the event of “benefits”.
“While the DEFI ecosystem continues to evolve, several areas guarantee more in -depth exploration. First, the interaction between DEFI and Tradfi requires more attention, in particular as the tokenization of real assets, the use of intelligent contracts in Tradfi and new forms of emerging digital intermediation.
Research could focus on understanding potential systemic risks if DEFI becomes more integrated into Tradfi, especially in critical sectors such as bank and insurance. Secondly, the role of stoves in support for DEFI growth and the risks posed by their instability requires more in -depth analysis, covering both the stability of the DEFI ecosystem and its potential repercussions with Tradfi. »»
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