Onchain finance is coming to Wall Street—and ignoring it is no longer an option

Onchain finance is making its way to Wall Street, and ignoring it is no longer an option. The concept describes the integration of the most powerful element of blockchain technology – public networks open to everyone on equal terms – with the trust of a reputable company that customers rely on. This new category of onchain products aims to compete with traditional finance on its own terms.

Like decentralized finance (DeFi), onchain finance uses public blockchains, offering transparency and resilience. However, unlike DeFi, onchain finance typically involves a third party with some degree of control over the product. While DeFi optimizes for permissionless and open transactions, onchain finance focuses on delivering a product that competes directly with traditional finance.

Legacy financial institutions have full control over their products and use outdated technology. On the other hand, onchain finance providers only control their products as much as necessary, inheriting all advantages of public blockchains. Regulated stablecoins, such as digital dollars backed by traditional assets, are an example of onchain finance. These stablecoins move across public blockchains, allowing transactions at any hour, in any country, and with a supply that continues to grow.

Regulated stablecoins rely on trusted issuers who must comply with federal legislation like the GENIUS Act, which places responsibility for reserves, redemptions, anti-money laundering, and sanctions obligations on the issuers. Similarly, other financial instruments like treasuries, money market fund shares, equities, bonds, and derivatives can also move onchain.

By bringing in a new wave of young, global, and always-connected customers, onchain finance is competing directly with legacy financial institutions for their own customers. As U.S. regulators create new rules tailored for these innovative products, Wall Street has a choice: adopt onchain finance and build on public blockchains, or risk losing customers to other institutions that embrace this technology.