Financial on-chain: A hypothetical picture of the major transformation of the US capital market
author:0xleoDeng, Partner and Head of Investments at LK Ventures
On December 4, SEC Chairman Paul Atkins was interviewed on the Fox Business program “Mornings with Maria” and proposed the vision of “the entire US financial market may move to the chain within two years”. It sounded radical even a bit like science fiction.
But if we let go of questioning the timeline and extrapolate this as a serious future scenario: if this were to happen, how would the US economy be reshaped?
This is not a simple technology upgrade, but a complete formatting of the underlying financial operating system. Here are the 7 levels of structural remodeling:
1. Market form: a “light-speed machine” that never sleeps
The first thing that was perceived was a change in the market's heartbeat.
* Rapid capital turnover in the T+0 era. The traditional T+1/T+2 settlement cycle will be a thing of the past. The transaction is settled, and there is almost no money stranded. This means that the capital turnover ratio (Velocity of Money) will increase dramatically, and the cost of capital occupation for the entire economy will be structurally compressed.
* The demise of the “closing bell.” The market will operate 7×24 hours a day, just like today's cryptocurrencies. This also means that there is no longer a physical barrier between the conduction of mood and fluctuations. The “close the door after the market, talk about it tomorrow” buffer period in the past has disappeared, and good news or black swans from anywhere in the world will directly impact asset prices at millisecond speed.
* SEC regulation became a “real-time cruise.” On-chain means absolute transparency. Who is opening positions, who is shorting, and where liquidity is being exhausted, regulators no longer rely on lagging reports, but directly monitor on-chain data. For manipulators, this is a nightmare; for markets, this is the new fairness brought about by “embedded regulation.”
2. Banking: From a “black box” to a “glass house”
The impact of going online to the commercial banking system is far more far-reaching than on exchanges.
* “Semi-disclosure” of balance sheets. When treasury bonds and credit assets are tokenized, regulation and the market can inspect banks' liquidity and collateral quality in real time.
* Double-edged sword effect: The risk of asset mismatch similar to SVB (Silicon Valley Bank) is more likely to be forewarned; but on the other hand, in a highly transparent world, there is no resistance to the spread of fear, and “crowding” may occur more simply and fatally.
* Everything can be collateralized (Collateralization): A company's accounts receivable, inventory, and even future cash flow can be turned into standardized on-chain collateral through smart contracts. Funding efficiency will be higher than ever before, but the focus of regulation must shift from a single “in-statement loan” to monitoring the intricate “programmable levers” in the chain.
3. Real Economy: The “Granular” Revolution of Capital
This is probably an underestimated point — going up the chain will bring “democratization of assets.”
* “Micro IPOs” for SMEs. Just as internet advertising allows small businesses to reach users, on-chain finance gives small and medium-sized enterprises the opportunity to issue compliant “micro securities.” Financing is no longer the prerogative of giants; capillaries of capital will infiltrate more grassroots economies through blockchain.
* Release of liquidity from non-standard assets. An office building, a power plant, or even a patent right used to only be played by large organizations. In the future, they will be fractionalized (fractionalized), and global investors will be able to buy one-tenth of their share just like stocks.
For the US, this means that its existing assets will receive a huge “liquidity premium” to attract active global capital injection.
4. Geopolitics: the “digital reinforcement” of dollar hegemony
Many people mistakenly think that “going up the chain” means decentralization and weakening national power; in fact, the opposite is true.
If the US takes the lead in tokenizing treasury bonds and monetary funds (MMF), so that global capital can buy dollar assets at the lowest cost, at the fastest speed, and without entry barriers — this will be the strongest moat for dollar hegemony.
In contrast, if the regulation and infrastructure of the Eurasian market are not synchronized, capital will vote with its feet and fervently pour into a more efficient and transparent dollar chain system. This is not just a dollar recession, but a “generational upgrade of monetary infrastructure.”
5. Risk restructuring: the crisis will not go away, it will only “mutate”
The financial crisis in the on-chain era will take on a new face.
* From “human panic” to “code glitches.” Smart contract bugs, the manipulation of oracles, the collapse of cross-chain bridges, and the chain reaction of automated clearing will become new sources of systemic risk.
* The “pressure cooker” effect of the crisis. Future crises will be more “technical” and “condensed.” It could break out and end in minutes, rather than spread over months like it did in 2008. The bailout no longer relies on “weekend meetings and negotiations,” but on “data decisions” and “code patches.”
6. Winners and losers: reshuffling ecological positions
Potential winners:
- Infrastructure builders: on-chain hosting, identity authentication (DID), compliance oracle service providers.
- Next-generation investment banks: large asset management institutions that know how to match on-chain assets on a global scale.
- Complex talent: scarce talent who knows both financial compliance and can read the Solidity code.
Transition painers:
- Traditional intermediaries: Clearing houses, transfer agents, and brokers that profit from poor information will be replaced by smart contracts if they do not revolutionize themselves.
- Grey industry: Any industry that relies on opaque, non-compliant capital flows will have no place to hide under full chain traceability supervision.
7. Realistic calm: the direction is certain, only speed is the variable
Finally, back to reality. Fully realized in two years? It's almost impossible.
Technological throughput bottlenecks, lagging legal frameworks, and a game of vested interests make it difficult to level these three mountains within 24 months.
The more likely path is gradual: starting with treasury bonds, the buyback market, and some OTC derivatives, the old and new systems go hand in hand, then slowly encroach on the old world.
But fast or slow, the direction Paul Atkins is pointing is irreversible. This is not only an iteration of technology, but also an instinctive choice for capital to pursue higher efficiency. The future of the US financial market is destined to be on the chain.
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