Bridging the US Capital Markets and Asian Liquidity Hubs Is the Key to Unlocking Institutional Crypto Adoption

For years, crypto has promised a more open and efficient financial system. A fundamental inefficiency remains: the disconnect between US capital markets and Asia's liquidity hubs.

The crypto industry has long touted its promise of a more open and efficient financial system. Yet, even as the US spearheads the integration of tokenized treasuries and real-world assets into DeFi and Asia remains a global crypto trading and liquidity hub, a fundamental inefficiency persists.

Despite recent efforts by the US to advance in Web3 and institutions’ increasing interest in digital assets, a significant bottleneck remains: the disconnect between US capital markets and Asia’s liquidity hubs.

This lack of interconnection poses a critical barrier to unlocking the full potential of digital assets for broader institutional adoption. To realize the full scope of crypto’s promise, we must ensure that various forms of capital can flow more seamlessly into digital assets.

While stablecoins serve as valuable bridges between traditional finance and crypto, providing onchain equivalents of fiat currencies, they are not sufficient on their own to sustain large-scale institutional participation.

Institutions require more than just fiat currency equivalents; they demand yield-bearing and readily available assets, such as US Treasurys or other fixed-income instruments, which are typically held in specific formats and structures that meet institutional standards. These assets are crucial for generating consistent returns and liquidity for institutions to manage their investments effectively.

Without a broad selection of these yield-bearing assets, which are readily accessible in formats suitable for institutional use, we will not witness the full influx of institutional capital into crypto markets. This lack of liquidity will, in turn, hinder the efficient functioning and growth of these markets.

What is the solution?

Crypto must go beyond simply tokenized dollars and develop structured, yield-bearing instruments that are recognized and trusted by institutions. We need a global collateral standard that seamlessly links traditional finance with digital assets. This standard must meet three core criteria to facilitate large-scale institutional participation.

Firstly, it must offer stability. Institutions will not commit meaningful capital to an asset class that lacks a robust foundation. Therefore, the collateral used in this new standard must be backed by real-world financial instruments which provide consistent yield and security.

Secondly, it must be widely adopted. Similar to how Tether’s USDt (USDT) and USDC (USDC) became de facto standards for fiat-backed stablecoins, we need widely accepted yield-bearing assets for institutional liquidity. Without standardization, we will continue to see market fragmentation, limiting crypto’s ability to integrate with broader financial systems.

Finally, this new collateral standard must be fully DeFi-native. These assets must be composable and interoperable across various blockchains and exchanges, allowing capital to move quickly and efficiently. Without onchain integration, digital assets will remain locked in separate liquidity pools, stifling the efficient growth of the market.

Without this type of infrastructure, crypto will remain a fragmented financial system. To ensure that both US and Asian investors can access tokenized financial instruments, like tokenized treasuries, in the same security and governance standard, we need to provide institutions with a seamless and compliant pathway for capital deployment.

Establishing a structured framework that aligns crypto liquidity with the financial principles that institutions rely on will determine whether digital assets can truly scale beyond their current limitations.

A new generation of financial products is beginning to solve this issue. Tokenized treasuries, like those from BUIDL and USYC, function as stable-value, yield-generating assets, offering investors an onchain version of traditional fixed-income products. These instruments provide a direct alternative to traditional stablecoins, enabling a more capital-efficient system that mimics traditional money markets.

Asian exchanges are beginning to incorporate these tokens, providing users in the region with access to yields from US capital markets. However, the opportunity goes beyond mere capital mobility.

The goal is to package crypto exposure alongside tokenized US capital market assets in a way that meets the technical and legal standards preferred by institutional investors while remaining easily accessible in the Asian context. This will allow for a more robust, compliant and scalable system that connects traditional and digital finance.

Bitcoin is also evolving beyond its role as a passive store of value. Bitcoin-backed financial instruments, like those offered by BlockDecomp, enable BTC to be restaked as collateral, unlocking liquidity while generating rewards for investors.

For Bitcoin to function effectively within institutional markets, it must be integrated into a structured financial system that aligns with regulatory standards in key markets, making it accessible and compliant for investors across different regions.

Centralized decentralized finance (CeDeFi), which combines the liquidity of centralized exchanges with DeFi’s transparency and composability, is another key piece of this transition. For CeDeFi to be widely adopted by institutional players, it must offer standardized risk management practices, clear regulatory compliance and deep integration with traditional financial markets.

This will ensure that CeDeFi-based instruments, such as tokenized treasuries, BTC restaking or structured lending programs, are deployed in a way that meets the technical and legal criteria preferred by institutions, rendering them easily accessible and integratable into broader institutional investment strategies.

The key shift is not just about tokenizing assets. It