From the document crisis to everything on the Blockchain: Why is Blockchain an essential path for the digital transformation of the Capital Market?

The capital market has undergone decades of transformation, evolving from paper stock certificates to electronic trading, yet it remains deeply entrenched in structural issues such as inefficiency, lack of transparency, and systemic risks. Former SEC senior legal advisor TuongVy Le recently collaborated with financial expert Austin Campbell to publish a report advocating that blockchain and asset tokenization will reshape market structures, creating a more direct, transparent, and risk-resistant financial system.

1/ Today we’re publishing Crypto and the Evolution of the Capital Markets. Skeptics like to say crypto is a solution in search of a problem, but in reality, it’s an answer to a decades-old one that the traditional securities markets still haven’t fixed: the lack of a more direct,… pic.twitter.com/G2ZlH8VTjg

— TuongVy Le (@TuongvyLe12) May 12, 2025

A disaster triggered by paper stock certificates: The historical trauma of the capital market.

The report begins by reviewing the "paper crisis" on Wall Street in the 1960s. At that time, trading volume surged, but transactions still relied on manual processing and paper stock certificates, leading to delays in settlement by brokerages, a large number of failed trades, and even the need to suspend trading days to allow back-office operations to "catch up."

In 1968, the New York Stock Exchange reported that over 2.6 billion dollars in securities could not be successfully delivered, ultimately leading to the bankruptcy of over 100 brokerage firms.

This crisis prompted Congress and the SEC to undertake significant reforms, including the enactment of the Securities Investor Protection Act and the strengthening of the clearing mechanisms, ultimately leading to today's highly intermediated securities trading system.

Enlarging the current capital market structure: The coexistence of "efficiency dilemma" and "monopoly risk".

Although the original intention was to address issues of information asymmetry and market manipulation, the report indicates that today's market structure has become an obstacle to efficiency:

From brokers, market makers, clearing institutions, transfer agents, registration organizations to data platforms, each layer of intermediaries not only extracts transaction fees but also forms information monopolies, increases friction costs, and concentrates risks.

For example, the clearing of almost all U.S. stock trades is currently handled by the DTC and NSCC departments under the U.S. Depository Trust & Clearing Corporation (DTCC), which has created a substantial monopoly due to this centralized structure. Moreover, the "Street Name Registration (" system further disconnects investors from issuing companies, increasing regulatory and communication costs.

The so-called "Street Name Holding" refers to the situation where the legal owner of the stocks is not the individual who purchases the stocks through a broker, but is instead registered under the broker or another nominee holder's name; this raises concerns such as lack of transparency, dilution of shareholder rights, and risk concentration among intermediaries.

The Financial Potential of Capital Blockchain: Reconstructing the Fundamental Logic of Transactions

The report further points out that blockchain and asset tokenization technology can fundamentally restructure the capital market structure. Its five major advantages include:

Decentralization: Transactions can be completed through smart contracts and decentralized exchange )DEX(, eliminating multiple layers of intermediaries.

Instant Settlement: Blockchain enables atomic transactions without T+1 delays, reducing counterparty risk.

Open and Transparent: All transactions can be verified on-chain, enhancing regulatory oversight and investor trust.

Programmable Finance: Allows for the design of complex functions such as automatic settlement, conditional performance, and trustless custody.

Stronger resilience: The decentralized architecture of Blockchain reduces the risk of single points of failure and enhances the stability of the financial system.

Le stated: "If this technology had existed in the 1960s, the overall landscape of the capital market might have been entirely different."

)From JPMorgan to Ethereum: How On-chain "Controlled Privacy" is Changing the Blockchain and Financial Rules of the Game? (

Technology is not a panacea: Next steps in risk awareness and regulation

Additionally, the report does not shy away from discussing the potential issues of blockchain systems, including smart contract vulnerabilities, private key loss risks, and the misuse or manipulation of on-chain information. Especially under decentralized architectures, the lack of clear accountability and regulatory targets also makes anti-money laundering and consumer protection significant challenges:

Whether it is the "sandwich attack" of DEX, the MEV issue, or the risks of asset misappropriation and insider trading that may occur in CEX, they all need to be addressed through institutional design and regulatory innovation.

Legislative calls are rising: an opportunity to build the next generation of financial markets.

The report points out that the United States is promoting several legislative proposals, such as the "21st Century Financial Innovation and Technology Act )FIT21(" and the "Responsible Financial Innovation Act )RFIA(" by Lummis and Gillibrand, which are crucial moments in building a new financial framework.

Le argues that regulation should move beyond the old thinking of "whether crypto assets are securities or commodities" and shift towards exploring "how to make the infrastructure of the Capital Market more efficient and transparent":

The common focus is to design a modern market regulatory framework that can both retain the advantages of Blockchain and mitigate new types of risks.

) The scale of securities tokenization reaches 22.6 billion! SEC Chairman Atkins: BlackRock and Franklin have already positioned themselves, and regulatory regulations need to keep pace with the times (

Traditional assets will eventually be "on-chain," redefining the financial market.

The report ultimately predicts that the ultimate value of crypto technology lies not in trading bitcoin or NFTs, but as the backbone of the future capital market. Le concluded, "Stocks, bonds, funds, and even real estate will eventually be tokenized and 'put on-chain', making the global financial system more open, democratic, and efficient."

This is not just a new technology, but an opportunity to build the future of finance. We cannot miss it.

) Bringing US stocks and ETFs on-chain! Ondo founder Allman: brokerages are competing to cooperate, BlackRock and Goldman Sachs will participate in governance verification (

This article From Document Crisis to Everything on the Chain: Why Blockchain is an Inevitable Path for the Digital Transformation of the Capital Market? First appeared in Chain News ABMedia.