Old money seeks new things: Wall Street accelerates "on-chain"

Author: Jason Jiang, OKG Research

From Bitcoin spot ETFs to the tokenization wave, institutional power represented by Wall Street is profoundly influencing and changing the direction of the crypto market, and we believe that this power will become stronger in 2025. For this reason, OKG Research has launched the "#ChainOnWallStreet" series of research, continuing to pay attention to the innovation and practice of traditional institutions in the field of Web3, and seeing how top institutions such as BlackRock and JPMorgan Chase embrace innovation? How will tokenized assets, on-chain payments and decentralized finance shape the future financial landscape?

In its predictions for the crypto market in 2025, investment management company VanEck boldly anticipated that Coinbase would "take an unprecedented step to tokenize its stocks and deploy them on its Base blockchain." The prophecy seems to be coming true: Jesse Pollak, the main developer of the Base chain, recently revealed that providing $Coin on the Base chain is "something we are studying in the new year" and expects that "every asset in the world will eventually be on Base."

It is not clear whether Coinbase can realize its plan, but when it uses its own stocks as the starting point for tokenization exploration, Wall Street is also accelerating "Onchain."

Wall Street Begins to Migrate to the Chain

Since 2024, the crypto market has seen rapid growth, and the boundaries of innovation have continued to expand. The core driving force behind this comes from the cryptocurrency spot ETFs promoted by Wall Street institutions represented by BlackRock. Today, these institutions are shifting more attention to the field of tokenization.

BlackRock CEO Larry Fink said that while the approval of crypto spot ETFs is important, these are "stepping stones" toward a wider tokenization of other assets. With the help of the tokenization boom, Wall Street is pushing more assets and businesses to the chain, allowing traditional finance and crypto innovation to collide more sparks in the digital space.

Although the tokenization of financial assets has been happening since 2017, it has only taken off wildly recently. Unlike the early explorations that focused on permissioned chains, more and more tokenization practices are gathering on public chains, and Ethereum has become the first choice for institutional tokenization. These institutions no longer reject decentralization, but actively explore the impact radius of encryption, trying to provide a new experience through the re-combination of assets and technology. As Coinbase said, "Web3" is gradually replaced by the more appropriate "Onchain".

It's just that this time, the protagonist is no longer just cryptocurrency, but also many assets from the physical world, such as stocks. As the largest cryptocurrency exchange in the United States, Coinbase is the most popular stock target in the tokenization market at this stage. According to rwa.xyz data, as of January 2025, the total market value of tokenized stocks is approximately US$12.55 million, of which nearly 50% are tokenized stocks with Coinbase as the target. In addition, the stock tokens of Nvidia, Tesla, and Apple, among the seven major U.S. technology stocks, also frequently appear on the chain.

Coinbase plans to tokenize its stocks and issue them on the Base chain, which will not only allow investors to trade their stocks directly on the chain, but also further integrate the trading platform, the Base chain, and the on-chain asset ecosystem, and explore a compliant and implementable stock tokenization model in the United States, so that it can stay ahead in the competition of crypto financial innovation.

This layout must not only be for $COIN tokenization. Perhaps, as Jesse Pollak said, they hope that all the assets in the world are on the Base chain. But compared with this, accelerating the migration of major global assets to the chain through tokenization is a more foreseeable future.

Although tokenization, like other innovative concepts, is also subject to skepticism, the concept centered on democratizing access to investment opportunities and simplifying the efficiency of capital flows has been deeply rooted in people's hearts. The on-chain availability demonstrated by stablecoins, BUIDL funds and other tokenized assets has proven its value, and more and more asset classes are migrating to the chain: not only the common private credit, bonds, funds and gold, but also agricultural products, carbon credits, rare minerals and other assets.

According to the OKLink Research Institute, in 2025 we will see Wall Street continue to frequently "Onchain" and promote a richer and more mature tokenization system: not only will the scale of on-chain tokenized assets of non-stablecoins exceed at least US$30 billion, but we will also see more companies enter the tokenization field under the leadership of Wall Street and bring more valuable assets to the chain. Although the scale of tokenization of these assets may not be "exaggerated", it is still of great significance.

Towards a more democratic future finance

60 years ago, when you bought financial securities or used them as collateral, you might have to wait 5 days to receive a paper certificate to confirm the transaction; later, as paper certificates became more and more numerous and transaction settlement became unmanageable, Wall Street was forced to start trying to use computers to track securities.

Today, gaining competitive trading advantages from better or faster technology is an omnipresent part of modern finance. Whether it is BlackRock and Goldman Sachs, or Citi and JPMorgan Chase, almost everyone on Wall Street has identified tokenization as the trend of the future and is embracing the changes brought about by tokenization. Compared with the passiveness of financial informatization, tokenization is the next step of change that finance actively embraces.

In this transformation, it is no longer a problem to deploy assets on the chain through tokenization. The challenge in the future is how to increase the demand for tokenized assets and solve the liquidity problem on the chain. The unparalleled success of traditional securities is largely due to their high liquidity and low transaction costs. If tokenized assets are only locked on the chain or can only be in the secondary market with limited liquidity, their actual value will also be very limited.

Nadine Chakar, who was in charge of the digital asset department of State Street Bank in the United States, once expressed a similar view, "The bank cooperates with a company to issue tokenized bonds and then issue a press release. What will happen next? Nothing will happen. These bonds are like stones and are difficult to circulate in the market."

How to solve the liquidity problem of the tokenized market? Different institutions may have different solutions, but in my opinion, the most direct way is to accelerate the tokenization of high-quality assets. Only by accumulating enough high-quality assets on the chain first can we attract more users and funds to migrate to the chain and solve the liquidity problem.

With the strengthening of network effects, tokenization is now moving from pilot to large-scale deployment. However, as McKinsey predicts, tokenization cannot be achieved overnight, and there will be a significant time difference in the tokenization process of different assets: the first wave will be driven by use cases with proven investment returns and existing scale, followed by use cases for asset classes with smaller current markets, less obvious benefits, or more severe technical challenges.

When the first wave of on-chain assets explores compliant and grounded business models and brings enough attention and liquidity to the on-chain market, perhaps tokenization will create a freer and more democratic "shadow" capital market in the future. Giving investors more free investment opportunities and allowing more companies to complete financing more conveniently, tokenization will bring profound changes to both the supply and demand sides of assets, and gradually eliminate the barriers between the off-chain and on-chain worlds, forming a truly global new financial ecology.