During a recent interview with Cointelegraph, Sergey Nazarov, the co-founder of Chainlink Labs, expressed optimism about the future of the financial system under the leadership of Paul Atkins as chairman of the U.S. Securities and Exchange Commission (SEC). Nazarov asserted that the “path towards the tokenization of the financial system” is now clearer, although the journey ahead is fraught with challenges including data tokenization, cross-chain connectivity, and compliance issues.
The potential implications of widespread tokenization are significant. Currently, the global cryptocurrency market cap stands at approximately $4 trillion. Nazarov posited that tokenizing traditional financial assets and integrating them onto blockchain platforms could potentially multiply this figure, dramatically enhancing the liquidity and accessibility of these assets.
Nazarov highlighted the staggering scale of traditional finance, noting that the global asset management industry reached a record $128 trillion in assets under management (AUM) as of 2024, marking a 12% increase from the previous year. Much of this capital is controlled by institutional investors such as insurance companies, pension funds, and family offices. In contrast, the crypto market remains largely fueled by retail investors. Nazarov stated that although retail demand could elevate cryptocurrency market capitalization to $8 trillion or even $10 trillion, reaching $50 trillion may require substantial participation from traditional finance.
The regulatory landscape has shifted dramatically since Donald Trump commenced his second presidential term in 2025. Previously, U.S. regulators advised institutional investors to steer clear of cryptocurrencies, branding them as illegal. However, under the current administration, regulators are now encouraging institutional engagement in the cryptocurrency market. Nazarov believes that significant movements of traditional finance assets into the blockchain space are inevitable, provided the macroeconomic environment remains stable. He cautioned that a shift from a “risk-on” to a “risk-off” sentiment could slow this transition, potentially triggered by factors such as a mild recession.
Despite these challenges, Nazarov remains confident that tokenization will prevail, albeit perhaps at a slower pace during economic downturns. Presently, he perceives favorable conditions for tokenization, particularly with expected interest rate cuts and proactive talks by the SEC chairman regarding the future of tokenized assets.
Nazarov also acknowledged the burgeoning field of blockchain oracles, which act as connective entities between blockchains and external systems. These oracles are crucial for the tokenization process, enabling functionalities that extend beyond simple data retrieval. Chainlink, the leading provider in this domain, offers a diverse range of oracles catering to various industries, including compliance and risk management.
Recent use cases demonstrate the operationalization of tokenization in the U.S., an evolution from earlier developments only observable in regions like Singapore, Hong Kong, and Dubai. Nazarov forecasts that several substantial U.S. tokenization projects will enter production this year, with an accelerating race expected in the following years.
He anticipates that over the next two to three years, at least $1 trillion in new tokenized assets could flow into the market, with potential for multiple trillions. This surge would redefine the cryptocurrency landscape, embedding tokenization as a core element of the industry.
Nazarov commended the current administration for its supportive stance towards both cryptocurrency and tokenization, which he believes will be instrumental in shaping the future of financial assets. As the momentum continues to build, the convergence of traditional finance and blockchain technology appears poised to innovate the financial landscape significantly.
