Wall Street has begun to turn its attention to digital assets, and in these recent years, truly dramatic changes are happening. In 2020, investing in digital assets was considered a career risk, but now major institutional investors are seriously considering entering the space. I’d like to organize what has happened at this turning point.

First and foremost, attention should be paid to the movements of large asset management firms. The entry of giants like BlackRock into the market has shifted the perception of digital assets from mere speculative instruments to foundational financial infrastructure. Traditional finance practitioners have realized that blockchain technology can simultaneously enable faster transactions, reduce costs, improve transparency, and enhance security. This technology has intrinsic value, especially to prevent crises caused by lack of transparency, like the 2008 financial crisis.

What’s particularly interesting is that digital assets originated not from Wall Street but from everyday users. That’s why they developed outside the scope of traditional regulatory frameworks. The initial conservatism of senior executives at major financial institutions was also due to this reason. But now, they are genuinely re-educating themselves. They recognize stablecoins as a killer app and see digital assets not as a replacement for the US dollar but as tools to rebuild financial infrastructure.

After the tightening period from 2023 to 2024, the stance of governments has shifted 180 degrees. The passage of the GENIUS Act, new SEC initiatives on digital assets, and the approval of digital asset allocations in 401(k) plans are rapidly shaping the regulatory environment. The pathway is becoming clear—from tokenizing short-term government bonds to eventually blockchain-izing traditional assets.

Using smart contracts, it’s possible to reduce IPO costs by tens of millions of dollars while maintaining SEC disclosure transparency. This will elevate financial efficiency to new heights. Since Wall Street has been an industry that invests heavily in technology, it’s natural for them to ride this wave.

While crypto ETFs have been successful products, large institutional investors have yet to fully participate. Bitcoin ETFs account for only about 7% of total supply, and large inflows from pension funds and government funds are still to come. In other words, recognition of cryptocurrencies as an alternative investment option is still in progress.

Several growth drivers are expected over the next five years: inflows into 401(k) funds, dissatisfaction among younger generations with traditional yields, the fusion of AI and digital assets, and wealth transfer from the Baby Boomer generation to younger cohorts. The synergy with AI is especially significant because AI needs blockchain for content authentication and encrypted payment systems for high-speed financial transactions between AI agents. This isn’t just an alternative investment but could become an essential infrastructure in the AI era.

If the collaboration between the U.S. Treasury and the Federal Reserve becomes more visible, low interest rates and persistent high inflation will continue. Such an environment has historically favored yieldless assets like digital assets. Furthermore, progress in stablecoin regulation and the on-chain integration of traditional assets will lower barriers to entry even further.

Of course, risks exist. Liquidation risks of highly leveraged financial firms, security vulnerabilities in traditional financial institutions. A correction of around 30% is quite possible. However, the likelihood of a catastrophic crash is low. The current infrastructure, regulatory environment, and institutional acceptance are far more mature than in past cycles.

Ultimately, I believe what’s happening isn’t just a shift toward alternative investments in cryptocurrencies but a structural transformation aimed at increasing the efficiency of the entire financial system. This is not merely an addition of a new asset class but the beginning of a grand process of reconstructing financial infrastructure.