Bridging Traditional Capital Markets and Digital Assets: Opportunities, Risks, and the Path Forward

Digital assets are rapidly coming out of the shadows and are set to play a key role in the future of global finance. While retail investors were the early adopters, institutional participation is accelerating. For established capital markets firms, this shift presents a significant opportunity to capture new revenue streams but also avoid the risk of ceding ground to faster-moving competitors.

The Opportunity: Unlocking New Revenue and Market Access

Digital assets—including cryptocurrencies, stablecoins, and tokenised real-world assets (RWAs)—are opening doors for traditional finance (TradFi) firms across multiple dimensions. Beyond simple trading, these instruments create opportunities in custody services, structured products, and yield-generating strategies.

Perhaps the most transformative development is the tokenisation of RWAs such as private credit and private equity. These historically illiquid instruments can now be tokenised, unlocking new revenue potential for intermediaries.

At the same time, client expectations are shifting. Both institutional and retail investors increasingly demand digital asset exposure. Firms that fail to offer these services risk losing business to crypto-native competitors that can meet these needs today.

Evolving regulation is also helping to smooth the path for capital market institutions wary of moving too fast. EU-wide regulation in the form of MiCA (Markets in Crypto-Assets) came into effect in December 2024, providing legal certainty for issuers, service providers, and investors in crypto and tokenised assets, while the GENIUS Act in the US, signed in July this year, helps bridge between fiat currencies and tokenised markets and provides more regulatory certainty. Meanwhile, the UK is in the process of developing its own regulatory framework for digital assets, with major UK banks advancing plans to introduce tokenised deposits in 2026.

In parallel, many established capital markets firms have been pushing into this space. BlackRock has taken a direct step into tokenized assets with a tokenized money-market fund called “BUIDL.” This is perhaps one of the most visible intersections of mainstream asset management and blockchain. Another groundbreaking example is the partnership between Lloyds Bank, Aberdeen Asset Management and Archax to tokenise real-world assets as collateral for foreign exchange trades. Elsewhere, Goldman Sachs and BNY Mellon have collaborated to roll out tokenised versions of money market funds, allowing institutional clients to subscribe and redeem via blockchain infrastructure

Banks, in particular, are well-positioned to leverage their expertise in market making. Digital asset markets often feature wider bid-ask spreads than equities or FX, creating profitable opportunities for liquidity providers. Ultimately, such organisations are looking to capture potential new investors, leveraging new liquidity tools and non-traditional asset types in the face of declining margins and weak ROI in their traditional sphere.

The Risk: Falling Behind in a Fast-Moving Market

The opportunities are clear—but so are the risks of inaction. Digital-native platforms and fintechs are moving faster, launching new products and capturing order flow before traditional firms have mobilised.

If incumbents fail to adapt, they face several threats:

• Loss of market share to more agile competitors that meet evolving investor needs sooner.
• Erosion of high-margin services like FX and remittances, as decentralised alternatives offer faster and cheaper processing.
• Disintermediation through DeFi, where younger users embrace self-custody wallets and decentralised exchanges, bypassing banks entirely.

Put simply: the longer traditional firms wait, the harder it will be to regain relevance.

Leveraging Existing Infrastructure: A Cost-Effective Path Forward

While many firms will be exploring the opportunities, they will also be concerned at the cost of entering new markets. The good news is that traditional capital markets firms don’t need to start from scratch. By adapting existing trading tools and infrastructure, they can extend into digital assets with minimal disruption and cost.

• Order Management Systems (OMS): Many existing OMS platforms can be extended to support crypto trading venues and settlement protocols.
• Risk & Compliance Tools: Sophisticated portfolio risk analytics, compliance monitoring, and position management systems already in use can be adapted for digital assets – particularly if their data management technology can adapt to new protocols.
• Data & Reporting: Real-time data feeds, analytics platforms, and reporting systems provide a foundation for digital asset market analysis, and such institutions are well versed at integrating new data sources.
• Connectivity: Perhaps most importantly, firms can leverage existing FIX connectivity to seamlessly receive digital asset order flow from their clients, avoiding the need for new, bespoke integrations. It should be straightforward for their platform APIs to be able to integrate with digital asset venues, as they are generally less complex than traditional exchanges.
• Partnerships & Security: Collaborating with digital asset custodians and trading platforms allows firms to manage unique security requirements at low cost to entry while retaining client trust.
• Settlement Innovation: Distributed ledger technology (DLT)-based clearing and settlement protocols can be integrated into post-trade systems, enabling faster, more efficient settlement.

Move Now, Move Smart

The market is already seeing issuance of tokenized RWAs, major banks offering crypto access to their clients, and regulation is catching up to enable institutional flows. For traditional capital markets firms, the opportunity is no longer theoretical.

By intelligently adapting infrastructure and leveraging third-party tokenization, custody, risk, and settlement modules, TradFi firms can move fast, reduce costs, and remain competitive against the threat of new entrants. Firms that act decisively now, will successfully bridge the strengths of their traditional business model and the opportunities that innovative new markets offer.

The partnership between Tradingstack.io and Rapid Addition seeks to bridge the gap between digital assets and traditional markets. By enabling institutions to access crypto trading through existing infrastructure, we help reduce integration cost and complexity, while improving time-to-market. The collaboration integrates the native crypto infrastructure and domain expertise of TradingStack with Rapid Addition’s established counterparty connectivity solutions and FIX domain leadership, delivering network effects that expand liquidity and hasten adoption. Together, we help customers drive cross-asset innovation and create hybrid products that enable new revenue opportunities and achieve cost efficiency.