When Financial Institutions Integrate with Web3: Exploring the Future of Blockchain Technology and Asset Tokenization

Recently, a dialogue themed "The Integration of Web3 and Traditional Finance" has attracted widespread attention in the industry. The discussion delved into the future trends of Blockchain technology, digital assets, and the tokenization of real-world assets (RWA). Here are the main points of the dialogue:

Opportunities and Motivations for Traditional Financial Institutions to Enter the Web3 Space

In the past two years, blockchain technology has gradually moved from proof of concept to practical application, especially in the traditional financial sector, where more and more institutions are focusing on asset tokenization, transparency, and efficient circulation. An asset management company under a large insurance group has taken an important step in this field by launching a tokenized US dollar money market fund and selecting a public blockchain as the on-chain infrastructure, with subscription amounts reaching 100 million USD on the first day of its launch.

For traditional financial institutions, entering the RWA field is a natural progression. They are already managers of physical assets, managing traditional financial assets such as stocks and bonds on a daily basis. It is very natural for them to enter this field. They hope to tokenize these assets and put them on the blockchain, providing asset products that are truly supported by underlying yields for the Web3 ecosystem. This not only fills the gap in the market but also hopes to change some of the biases and misunderstandings the traditional financial sector has about the Web3 world.

Real Challenges Faced by Traditional Institutions in Transformation

Traditional institutions face many challenges in exploring Web3. First is the establishment of an internal control system. Many Web3 projects have relatively weak internal controls, which is unacceptable in the traditional financial system. Traditional financial institutions hope to bring decades of accumulated mature experience and standardized processes into Web3 asset management, especially in terms of security, risk control, and compliance, to establish standards that can benchmark traditional funds.

Secondly, the immaturity of infrastructure is a challenge. From custody to banking interfaces, and then to fund administration services, many aspects are still in exploration. Currently, some institutions can achieve approximately 70%-80% of the standards of traditional funds, which is already a relatively high level of regulation in the industry. As the infrastructure continues to improve, it is expected that this ratio will further increase in the future, achieving a deep integration of traditional finance and Web3.

The Practical Path Selection for Asset Tokenization

When selecting tokenized assets, many institutions currently focus only on the tokenization of financial assets, rather than physical assets. This is because the essence of tokenization is to issue a token on the blockchain that represents a real-world asset, and ensuring a strong connection between the token and the underlying asset is the most fundamental and challenging part.

In contrast, financial assets (especially standardized assets like fund shares) can clearly ensure the binding relationship between the token and the underlying asset in the legal framework, making it easier for regulation and custody. This is why many institutions currently choose financial assets as the object of RWA.

The core value of tokenization has two aspects:

1. Lowering the threshold and expanding access for investors.
2. Improve efficiency, including the convenience of transactions, reduced costs, etc.

If tokenization does not bring significant improvements in liquidity, efficiency, or security, it loses its meaning. The first question to address in RWA is "why do it," followed by "what to do" and "how to do it." Only tokenization that brings real value is worth promoting.

Recommendations for Traditional Financial Institutions to Enter

RWA is considered a trending and highly certain track. It is the path closest to traditional financial logic and most likely to achieve scalable implementation, connecting real-world assets with on-chain infrastructure.

For traditional financial institutions, RWA is a worthwhile direction to invest in. It is recommended to establish a dedicated innovation team or Web3 business unit within the organizational structure; in terms of human resources, reserve composite talents who understand both finance and on-chain mechanisms; and in terms of technology, it is not necessary to build everything in-house, but to choose trustworthy, secure, and compliant cooperation platforms.

Conclusion

The entry of institutions into Web3 is not a one-time event; it requires finding a feasible path within the existing regulatory framework and balancing innovation with stability. I believe that in the near future, we will see more and more traditional financial assets achieving more efficient circulation through Blockchain, and more institutions truly entering Web3, allowing this industry to transition from exploration to true maturity. The combination of traditional finance and Web3 carries both a compliance mindset and the courage for innovation.