Matt Hougan "Stock Trading Slower Than Email, The Solution Is 'Blockchain'"

▲ Stock trading, email/AI generated image

A forecast has been made that a financial settlement system which currently takes several days could be transformed into real-time settlement through blockchain-based asset tokenization.

Matt Hougan, Chief Investment Officer of Bitwise, strongly criticized the current settlement structure of the stock market in an interview with Sujal Jethwani. He pointed out the reality that it takes several days for assets to be reflected in an account after a U.S. stock trade is completed, emphasizing that a financial system slower than email is being maintained. He explained that the global financial sector is moving towards asset tokenization as an alternative to solve these inefficiencies.

BlackRock CEO Larry Fink evaluated asset tokenization as the starting point for a transition where all assets become digital. He defined tokens as digital certificates of ownership operating on a blockchain, stating that it's possible to build a market with 24-hour trading and settlement in seconds. Hougan also presented the ability for immediate settlement and the elimination of intermediary steps in the existing financial system as key changes if tokenization is introduced.

Currently, stock trading has a complex structure involving multiple entities such as custodians and banks, and it goes through up to 7 stages until a single transaction is completed. The costs incurred in this process are passed on to investors. An analysis suggests that if blockchain is utilized, this structure can be simplified, creating an environment where funds move directly.

Currently, the size of the tokenized stock market is approximately $680 million, while the entire U.S. stock market is approximately $68 trillion, showing a significant disparity. Paul S. Atkins, Chairman of the Securities and Exchange Commission (SEC), predicted that the entire U.S. market could move on-chain within the next few years. This represents a growth of about 100,000 times compared to the current state. Hougan emphasized that the market's potential is underestimated regarding this outlook.

For market transition, the expansion of the stablecoin market and the growth of the blockchain ecosystem are also considered essential conditions. If global financial assets adopt blockchain technology, investors are expected to encounter an environment where they can use financial services at email-level speed and much lower costs.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. This content should be interpreted for informational purposes only.*