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Bridging TradFi and DeFi will require hybrid systems, panelists say
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Summary
A Fed-hosted panel of industry and bank leaders said linking traditional finance and decentralized finance will require standards, synchronized books-and-records, and a multi-year hybrid approach to reconcile regulatory, accounting and technical requirements.
Rebecca Redig, chief legal officer at JEDO Labs, opened a Federal Reserve panel Wednesday by asking how traditional financial institutions can manage the fragmentation of dozens of blockchain networks while meeting banks’ compliance and books‑and‑records requirements.
Panelists said the answer is not a complete replacement of legacy systems but a layered, hybrid approach that synchronizes existing bank systems with blockchains and builds cross‑chain standards.
Sergei of Chainlink described two interoperability levels: first, integrating existing back‑end systems and messaging standards with chains so transactions meet accounting and compliance rules; second, creating cross‑chain standards to address fragmentation as more chains are launched. “You need standards,” he said, arguing that banks’ legal and technical requirements will necessitate a hybrid system for the next two to five years.
Jackie Reses, cofounder and CEO of LeadBank, said many banks already provide underlying infrastructure for crypto and fintech clients but that consumer wallet use cases remain limited. Reses warned the banking sector is not yet ready to absorb extreme fragmentation for retail activity and predicted banks will initially focus on institutional wallets and infrastructure integration through core providers such as Fiserv and FIS.
Jennifer Barker, who runs treasury services and depository receipt businesses at BNY, emphasized that banks’ scale and regulatory frameworks remain essential. She highlighted FedNow and ISO standards work as existing rails and formats that must be made compatible with tokenized assets, and urged continued investment in resilient infrastructure and industry collaboration.
The panel repeatedly flagged organizational barriers—skills, engineering velocity, and change management—as larger constraints than cryptographic or ledger technology. Panelists recommended clear guidance and standards from regulators and careful, iterative upgrades to existing rails so the U.S. payments landscape can grow without undermining consumer protections.
The session closed with a practical call to action: focus on standardization, upgrade settlement windows where appropriate, and align technical integrations with the legal and compliance playbooks banks already use.
