Author: 0xLeoDeng, Partner and Investment Director at LK Ventures
On December 4, SEC Chairman Paul Atkins accepted an interview on Fox Business's (Mornings with Maria) program, presenting the vision that 'the entire American financial market may migrate on-chain within two years,' which sounds radical and even somewhat like science fiction.
But if we temporarily set aside our doubts about the timeline and treat this as a serious future scenario to speculate on: If this really happens, what kind of shape will the American economy take?
This is not a simple technological upgrade, but a complete reformatting of the financial underlying operating system. Here are 7 aspects of structural reengineering:
1. Market form: An 'ever-awake light-speed machine.'
What is first perceived is the change in the market's heartbeat rhythm.
* The rapid turnover of capital in the T+0 era. Traditional T+1/T+2 settlement cycles will become history. Transactions will settle immediately, and capital will almost no longer be retained. This means that the velocity of money will increase significantly, and the cost of capital occupation for the entire economy will be structurally compressed.
* The demise of the 'closing bell.' Markets will operate 24/7 like today's cryptocurrencies. This also means that the transmission of sentiment and volatility will no longer have physical barriers. The past buffer period of 'closing after hours, let's talk tomorrow' has disappeared; good news or black swans from any corner of the world will directly impact asset prices at millisecond speed.
* The SEC's regulation becomes 'real-time cruising.' On-chain means absolute transparency. Who is building positions, who is naked shorting, where liquidity is drying up, regulators no longer rely on delayed reports but directly monitor on-chain data. For manipulators, this is a nightmare; for the market, this is the new fairness brought by 'embedded regulation.'
2. Banking: From 'black box' to 'glass house'
The impact of going on-chain on commercial banking systems is far deeper than that on exchanges.
* The 'semi-publicization' of balance sheets. When government bonds and credit assets are tokenized, regulators and the market can instantly see through banks' liquidity and collateral quality.
* Double-edged sword effect: Asset mismatch risks similar to SVB (Silicon Valley Bank) are more likely to be warned in advance; but on the other hand, in a highly transparent world, the spread of fear has no resistance, and 'bank runs' may happen more decisively and lethally.
* Collateralization: A company's receivables, inventory, and even future cash flows can be transformed into standardized on-chain collateral through smart contracts. Financing efficiency will increase unprecedentedly, but regulatory focus must shift from single 'on-balance-sheet loans' to monitoring the intricate 'programmable leverage' on-chain.
3. Real economy: The 'granularity' revolution of capital.
This may be an underestimated point—on-chain will bring about the 'democratization of assets.'
* Micro IPOs for small and medium-sized enterprises. Just as online advertising allows small businesses to reach users, on-chain finance provides small and medium-sized enterprises with the opportunity to issue compliant 'micro-securities.' Financing is no longer the privilege of giants; the capillaries of capital will penetrate deeper into the grassroots economy through blockchain.
* The liquidity release of non-standard assets. An office building, a power station, or even patent rights were previously only available to large institutions. In the future, they will be fragmented, allowing global investors to buy fractions of a share just like buying stocks.
For the United States, this means that the existing assets within its borders will gain a huge 'liquidity premium,' attracting global capital to actively inject.
4. Geopolitics: The 'digital reinforcement' of dollar hegemony.
Many mistakenly believe that 'on-chain' means decentralization and a weakening of state power; in fact, it is quite the opposite.
If the United States takes the lead in tokenizing government bonds and money market fund (MMF) assets, allowing global capital to purchase dollar assets at the lowest cost, fastest speed, and with no entry barriers—this will be the strongest moat of dollar hegemony.
In contrast, if the regulation and infrastructure of the Eurasian market cannot synchronize, capital will vote with its feet, flooding into a more efficient and transparent dollar on-chain system. This is not a decline of the dollar but a 'generational upgrade of monetary infrastructure.'
5. Risk reconstruction: Crises will not disappear, only 'mutate.'
The financial crisis in the on-chain era will present a whole new face.
* From 'human panic' to 'code failure.' Bugs in smart contracts, manipulation of oracles, collapse of cross-chain bridges, and chain reactions of automated settlement will become new sources of systemic risk.
* The crisis's 'pressure cooker' effect. Future crises will be more 'technical' and more 'condensed.' They may erupt and end within minutes, rather than spreading over months like in 2008. Market rescue will no longer rely on 'weekend negotiation meetings,' but on 'data-driven decisions' and 'code patches.'
6. Winners and losers: The reshuffling of ecological niches.
Potential winners: – Infrastructure builders: On-chain custody, identity verification (DID), compliance oracle service providers. – The new generation of investment banks: Those who know how to match on-chain assets globally among large asset management institutions. – Composite talents: Scarce talents who understand financial compliance and can also read Solidity code.
Transformational pain points: – Traditional intermediaries: Clearing houses, transfer agents, brokers relying on information asymmetry for profit, if they do not revolutionize themselves, will be replaced by smart contracts. – Gray industries: Any industry relying on opaque and non-compliant capital flows will have nowhere to hide under fully traceable regulation.
7. Realistic calm: The direction is certain, only the speed is variable.
Finally, back to reality. Achieving this within two years? Almost impossible.
The bottleneck of technical throughput, the lag of legal frameworks, and the games played by vested interests, these three mountains are difficult to flatten within 24 months.
A more likely path is incremental: Starting from government bonds, the repurchase market, and some OTC derivatives, with new and old systems running in parallel, slowly eroding the old world.
But regardless of speed, the direction pointed out by Paul Atkins is irreversible. This is not just technical iteration but is also a natural choice for capital in pursuit of greater efficiency. The future of the U.S. financial market is destined to be on-chain.
(The above content is excerpted and reproduced with authorization from partner PANews, original link | Source: LK Venture)
"If Wall Street 'goes fully on-chain': What will the U.S. economy be reshaped into?" This article was first published in (Blockcast).