Linking TradFi and DeFi: The future of Finance

December 16, 2022
Linking TradFi and DeFi: The future of Finance

At first glance, it’s easy to think of traditional finance and crypto as two contrasting and opposite forces. However, if we take a step back, we can see that they have a lot in common and have the potential to complement each other in powerful ways. As the world of finance continues to evolve, the integration of traditional finance (TradFi) with decentralized finance (DeFi) is becoming an increasingly hot topic.

TradFi (Traditional Finance) has stagnated over the past decade, with increasingly expensive fees accompanying payments, flatlining interest rates, and a jumble of intermediaries. While the sector is limited by regulations and rates set by government bodies, there was no such constraint in the crypto world.

Cryptocurrencies became a significant force during the pandemic, and many people saw them as the solution to the shortcomings of the current financial system. The different innovative protocols, combined with the freedom and blockchain technology, led to the rise of DeFi, covering a wide range of financial services without intermediaries such as banks.

While the lack of regulation and oversight can be seen as a strength for DeFi, it’s also one of the biggest challenges. This means that DeFi is vulnerable to fraud and other nefarious activities. This lack of regulation has led many traditional financial institutions to view DeFi with suspicion and skepticism.

However, it is not all bad news since many financial institutions are already jumping into the crypto pool. The goal is not to see it as DeFi vs. TradFi; where we are headed is a transformation of our financial systems. Banks and fintech leaders are looking to merge the best features of cryptocurrencies and DLT with what’s already tested and working in TradFi. We will briefly look at exciting endeavors that can come out of linking DeFi and TradFi.

Blockchain and Financial Institutions

Leading banks are starting to realize the usefulness of Distributed Ledger Technology (DLT) and blockchain to improve their existing offerings to their customers. While many banks and financial institutions are still skeptical about the technology, some are hiring blockchain experts to experiment with it; others are adding crypto products as options to customers as part of their wealth management services. Here are some examples:

Onyx

The world’s first bank-led blockchain by JPMorgan Chase to facilitate the exchange of digital assets, information, and value. Onyx was formed in 2020. It has four offerings:

  • Liink — Allow seamless data sharing between institutions.
  • Coin system — Focused on digital solutions for the transfer and clearing of money
  • Blockchain launch — Developing and launching new networks, applications, and shared platform technology.
  • Onyx digital assets — Enabling the exchange of value for different digital assets.

Utility Settlement Coin (USC) Project

Backed by many big banks, the USC project started as a research project into how tokenized assets and DLT are in TradFi by enabling instant cross-border payment between banking institutions.

Rebus

Rebuschain will be an inclusive financial system that makes crypto products and services a universal option for billions of people. DeFi is a resource for the financial industry’s progress, and Rebus is the gateway. This familiarity is ideal for financial institutions looking to offer crypto products and services but unsure where to start.

Rebus is a regulated investment platform that uses $REBUS, our native utility coin, to allow asset managers, banks, and other financial institutions to manage and sell DeFi instruments along with their Traditional (TradFi) instruments.

Integration will be key.

As financial institutions are exploring the crypto space and discovering what works for them, integrating DeFi and TradFi products successfully means they can continue attracting even more wealthy customers interested in the DeFi sector.

DeFi platforms and banks that can offer this will see a lot of success in the coming years. The Rebus platform bridges the gap between DeFi and TradFi while maintaining the high standard of security and quality that TradFi institutions have come to expect. Frictionless cross-platform integration between TradFi and DeFi goes on to provide seamless services to investors.

“Rebus was created to satisfy a specific need of investors to trust their investments and have better leverage over them. And as our advisors and partners have confirmed, this is exactly what their traditional investor clients want. At the moment, many people trade crypto but few people invest their savings in a structural and long-term way when it comes to the crypto/blockchain/DeFi world. I believe that everyone deserves the transparency provided by blockchain technology, and Rebus is a big step in making that accessible to everyone.”
— Paolo Baroni, Founder & Financial Product Lead at Rebuschain

This pairing is beneficial for banks, financial institutions, and crypto projects. DeFi projects can learn from seasoned financial experts and apply their wisdom to create better products that push crypto into the hyper-adoption phase.

The Future of Finance

It’s only a matter of time before regulation comes knocking for the crypto space, especially with the recent activities by bad actors in the space. As regulation tightens, thriving DeFi projects will be those that can predict fast-changing trends in the crypto space. Platforms like Rebus and banks adopting crypto products into their offerings for customers will see their efforts pay off soon.

The future of finance isn’t just TradFi or DeFi; it is both.

Learn more about Rebus

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