"TradFi and crypto connect": this is how Chainlink, Fireblocks, Lead Bank, and BNY see the bridge to the payments of the future.

At the Payments Innovation Conference organized by the Federal Reserve of the United States, the panel “Connecting Traditional Finance with the Digital Asset Ecosystem” was held, moderated by Rebecca Rettig, legal director of Jito Labs.

The conversation brought together key figures from both worlds: Sergey Nazarov, co-founder and CEO of Chainlink; Jackie Reses, CEO of Lead Bank; Michael Shaulov, CEO of Fireblocks; and Jennifer Barker, global director of Treasury Services and Depository Receipts at BNY.

The debate revolved around a central question: how can the traditional financial system integrate with the innovations of the crypto ecosystem without losing security or trust?

Rettig opened the dialogue by defining DeFi as a software system based on open blockchains that allows transactions to be conducted without intermediaries. He highlighted a crucial point: it is not about DeFi replacing banking, but about building bridges that combine innovation and stability.

Although the sector remains small compared to the global economy, its potential to transform payments and financial services is undeniable.

Interoperability at Two Levels

Sergey Nazarov explained that the first challenge is to achieve synchronization between current banking systems - their databases, back-ends, and standards like SWIFT - with blockchains, ensuring compliance and traceability.

The second level of interoperability consists of connecting multiple blockchains to avoid capital fragmentation. It is not just about “linking” systems, he warned, but ensuring that transactions meet accounting and regulatory requirements, something that smart contracts can automate.

Banking: capabilities over technology

Jackie Reses was direct: the real obstacle is not technology, but the execution capability and knowledge within institutions. Banks must learn to operate with shorter cycles and a 24/7 mindset.

He identified two areas where change is already underway: the on/off-ramp infrastructure to connect fiat money with crypto and the future banking wallets powered by core providers. FedNow, he said, is evidence that the infrastructure exists; the choice of each rail will depend on actual costs and speed.

Custody, security, and standards: the true bridge to DeFi

Institutional custody, beyond the vault

Michael Shaulov recalled that in the crypto world, custody is not about holding cash, but about protecting private keys. Technologies such as multi-signatures and multiparty computation (MPC) have become the new security standard. The challenge is to integrate them into banking systems designed decades ago, with slow processes that rely on manual updates.

He proposed creating regulatory frameworks in the United States similar to the European DORA, which establish clear guidelines for securely incorporating this digital infrastructure.

Tokenized deposits vs. stablecoins

Jennifer Barker explained that tokenized deposits represent money within the bank, while stablecoins are money outside the bank, backed by assets and capable of circulating across different blockchains.

Both will coexist but with different functions: the former offers efficiency and liquidity 24/7; the latter, global agility. Barker also emphasized the importance of international standards such as ISO 20022 and the use of artificial intelligence to optimize payments, detect anomalies, and prevent fraud.

On-chain Compliance

From the technological side, Fireblocks highlighted the advancement of on-chain identity to adapt KYC and AML processes to the decentralized environment.

Chainlink, meanwhile, is working on proof of reserves and solvency systems that increase transparency regarding stablecoins, tokenized deposits, and real-world assets, allowing users to assess risks more informed.

What the Fed panel expects

The panelists agreed that the future of payments requires reconciling existing infrastructure with new forms of digital money, defining clear rules on risks and redemption, and acting cautiously in response to the increase in fraud driven by AI.

All of this is aligned with the vision presented by Christopher Waller at the opening of the event: a more enabling role for the Fed, facilitating innovation without compromising the stability of the financial system.