At LimeChain, our purpose is to build, explore, and expand blockchain solutions that create value for leaders and organizations. In this article, we aim to share our perspective, expertise, and knowledge to help decision-makers in banking, asset management, wealth management, and internal audit navigate the evolving landscape of decentralized finance.
Norbert Wiener, the renowned mathematician and founding father of cybernetics, once observed:
"Great empires are held together by improved means of communication."
This idea resonates deeply with the adaptive and ever-evolving nature of modern finance and banking. In an industry built on trust and interoperability, the ability to communicate efficiently and reliably is not just an advantage; it's a fundamental necessity for growth and stability.
Today, the financial world faces a pivotal challenge: traditional bank financing alone is no longer sufficient to meet the growing capital needs of the global economy. This reality makes the digitization of private markets not just an option, but an imperative to bridge the widening funding gap. Consider the sheer scale of the challenge: an estimated $94 trillion in infrastructure investments will be needed globally by 2040, a demand that traditional capital sources simply cannot meet. Unlocking private markets is thus critical for sustained economic growth.
Several converging factors underscore this view:
The sheer volume of investment required for critical areas like infrastructure development and technological innovation far exceeds what conventional banking and public markets can provide. The World Economic Forum estimates a $15 trillion infrastructure investment gap until 2040, a figure reinforced by the Global Infrastructure Hub's (GI Hub) projection of an average annual infrastructure investment gap of $650 billion between 2022 and 2040, increasing by 3% per year. These figures collectively highlight an immense capital deficit, even as trillions of dollars sit idle, waiting for accessible investment avenues.
Historically, private market investments (e.g., private equity, private credit, real estate) have been characterized by illiquidity, opacity, and limited access, typically reserved for large institutions or ultra-high-net-worth individuals. As the NBER working paper "The Illiquidity Puzzle" (2004) suggests, this illiquidity is often a strategic choice by fund managers to attract "deep pocket" investors, rather than a mere inefficiency. This implies that this deliberate exclusivity, while rational under older paradigms, now constitutes a major bottleneck for meeting the global economy's escalating capital needs.
The process of representing real-world assets as digital tokens on a blockchain offers a powerful solution. Tokenization enables fractional ownership, drastically lowering investment minimums and opening these valuable assets to a much broader range of investors. It also enhances transparency and can create pathways to secondary market liquidity for traditionally illiquid assets. As the World Economic Forum highlights, while "Today's global financial system relies on fragmented, message-based integrations," tokenization offers the potential for "unified systems of record," fundamentally re-engineering financial infrastructure for greater efficiency and transparency.
For forward-thinking financial institutions, embracing these digital transformations represents a substantial opportunity to tap into new revenue streams, expand market reach, and better serve a wider client base. Private markets are now a segment "too large to ignore," and the asset tokenization market alone is projected to reach $2.08 trillion in 2025, growing to $13.55 trillion by 2030 (a 45.46% CAGR). Real-world asset (RWA) tokenization, already over $50 billion, is forecasted to reach $4 trillion by 2023.
The path to growth lies in continuous financial innovation and digital enablement.
For asset and wealth managers: the core task is to accelerate the unlocking of private markets through innovation that not only better manages risks but also provides clearer, more timely data. The future of investing will undoubtedly feature greater integration across diverse asset classes, driven by digital solutions.
For Digital Transformation Officers (DTOs) and banks: the focus must be on adopting technology that offers a more secure, effective, and user-friendly way to handle financial transactions. This includes exploring transformative use cases in payments, derivatives, settlement, securities, syndicated lending, and trade finance. A crucial insight for DTOs is to involve Internal Audit (IA) and the Chief Auditing Officer (CAO) from the very inception of any blockchain Proof-of-Concept (PoC) to ensure audibility and compliance are built in from day one.
For entrepreneurs and startups, blockchain and Decentralized Finance (DeFi) stand as key enablers, ready to power this new era of financial innovation.
The transformative potential of Decentralized Finance (DeFi) is undeniable. This rapidly growing sector is fundamentally driven by an increasing demand for transparent, accessible, and permissionless financial services. As decentralized finance scholar Campbell R. Harvey argues in his book “DeFi and the Future of Finance”, fintech efforts that merely digitize the “current banking infrastructure” are likely to be fleeting. Conversely, he suggests that those leveraging decentralized methods “in particular blockchain technology” hold the best chance to define the future of finance.
Projections that indicate that tokenized market capitalization alone could reach $2 trillion by 2030, signal a shift in how financial assets are managed and exchanged globally.
This outlook is strongly supported by the Financial Data and Markets Infrastructure (FDMI) industry, a vital segment of financial services, which has demonstrated remarkable growth, with global revenues increasing by an 8% Compound Annual Growth Rate (CAGR) since 2018, surpassing $278 billion in 2023. Furthermore, from January 2019 to December 2023, the FDMI segment's Total Shareholder Return (TSR) reached 17%, significantly outperforming the broader financial services sector by 70%. This substantial growth in the FDMI industry highlights a significant trend: over the last few years, the focus of FDMI providers has indeed moved from speculative cryptocurrencies to the fundamental technology of tokenization - blockchain. And there good reasons for this shift.
At its core, blockchain technology offers a suite of powerful benefits that address many of the long-standing challenges in traditional finance:
Despite these compelling advantages, institutional adoption of blockchain can be slowed by several familiar barriers:
However, these barriers are not insurmountable. We stress the strategic imperative of blockchain as the foundational technology for audit-proof, sustainable, and continuous financial innovation. Its role is so critical that it also serves as a prerequisite for the efficient implementation of Artificial Intelligence (AI) in finance, as AI models rely heavily on high-quality, verifiable data. As the COSO report, "Blockchain and Internal Control: The COSO Perspective, July 2020," puts it:
"Adoption of blockchain may not be a choice."
Let's dive into some concrete examples of how blockchain is being applied in the financial, banking, and asset management sectors:
As author Yuval Harari stated during an interview at the WSJ’s CEO Council on AI and Human Evolution:
“The most important thing is that we need to solve our own human problems, instead of relying on AI to solve them. And the key problem is that of trust and cooperation.”
This simple insight underscores a critical challenge in the age of Artificial Intelligence (AI): for AI to genuinely enhance trust and cooperation in financial systems, and not damage or destroy them, it must operate on a foundation of unimpeachable data integrity.
The inherent characteristic of data immutability on a blockchain ensures that once a data structure is created, it cannot be changed. Any alterations require creating a new, separate version. This append-only nature creates a clear and comprehensive audit trail, crucial for maintaining transparency and accountability in financial transactions and for ensuring the integrity of data fed into AI models. Without such reliable, tamper-proof data, AI's potential for accurate insights and automated decision-making is severely limited. Blockchain thus acts as a touchstone of sorts for AI, providing an immutable and verifiable record.
A systematic literature review of over 100 peer-reviewed studies published between 2020 and 2024, analyzing the benefits, challenges and future directions of blockchain-AI applications in financial services, affirms this synergistic potential: while blockchain enhances data integrity, security, and transparency, AI drives predictive analytics and automation. PwC also emphasizes data integrity as foundational for Responsible AI practices in finance, requiring clear oversight and validation of data sources.
Leading this evolution, Accenture, in collaboration with Hedera Foundation and EQTY Lab, is developing verifiable AI governance solutions for the public sector, leveraging decentralized infrastructure for immutable records of AI decisions. Another noteworthy example the collaboration between NTT Digital and Accenture on developing a Universal Wallet Infrastructure (UWI) which aims to facilitate secure, dynamic data sharing, fostering a trusted data economy for AI proliferation.
Blockchain is transforming traditional lending and borrowing by enabling more efficient, transparent, and accessible credit markets. Decentralized lending protocols allow participants to lend and borrow directly, often with automated terms enforced by smart contracts. Leading examples of DeFi lending platforms include Aave, Morpho, and Compound. These platforms operate through liquidity pools where users supply crypto assets to earn interest or borrow against their digital assets without needing traditional credit checks or bank accounts.
This evolution in lending and borrowing holds immense potential for financial inclusivity, particularly for millions unbanked or underbanked. The World Bank highlights emerging markets as ideal for blockchain-based solutions due to underserved populations, suggesting blockchain can facilitate digital identity and boost financial inclusion. Academic research further indicates that peer-to-peer (P2P) lending, enhanced by blockchain, positively influences traditional bank-based financial inclusion in developing countries by empowering marginalized borrowers with necessary financial literacy and documentation.
Trade finance, traditionally a paper-intensive and complex process involving multiple parties and jurisdictions, is ripe for blockchain-driven modernization. A single international trade transaction can involve up to 50 documents and 30 different stakeholders, highlighting deep-seated complexity. Blockchain digitizes trade documents, automates payments via smart contracts, and provides a shared, real-time view of the transaction lifecycle. This dramatically reduces document checking and exchange times (from 5-10 days to under 24 hours), significantly cutting fraud (e.g., double financing), increasing visibility, and accelerating settlement for all parties.
Major consortia like Contour Network (digitizing letters of credit on R3 Corda) and Marco Polo Network (a trade and working capital finance network powered by Azure and R3 Corda, joined by Mastercard to unlock a potential $1.5 trillion opportunity) are actively demonstrating this evolution.
Citi Token Services for Cash and Citi Integrated Digital Assets Platform (CIDAP) are also piloting smart contract-enabled conditional payments in North America.
The widespread formation and active deployment of these blockchain consortia in trade finance signal an industry evolution. This strategic shift moves beyond competitive, siloed solutions to a shared, collaborative utility, leveraging blockchain's ability to create a single source of truth across disparate parties for industry-wide efficiency and risk reduction.
Blockchain is revolutionizing asset management by enabling innovative approaches to portfolio construction and management. It facilitates fractional ownership of high-value assets, making previously inaccessible investments available to a wider investor base. By improving liquidity for illiquid assets and enhancing transparency in portfolio holdings and performance, blockchain offers asset and wealth managers new tools to optimize portfolios and attract new capital.
Asset tokenization, particularly of real-world assets (RWAs) such as real estate, private equity, and commodities, is a game-changer. By converting ownership rights into digital tokens on a blockchain, tokenization broadens investor access by lowering investment minimums. It also creates the potential for secondary markets, enabling greater liquidity for assets traditionally held for long periods. Furthermore, it provides real-time, transparent visibility of ownership and transaction history, enhancing trust and efficiency.
The vision for tokenization is gaining significant traction among leading financial institutions. As Larry Fink, Chairman and CEO of BlackRock, stated:
“We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond […] will be on one general ledger.”
BlackRock is actively pursuing this vision, having launched its BUIDL fund in March 2024, which is an institutional-grade tokenized investment fund concentrating on US Treasury bonds. BlackRock also invested $47 million in Securitize to build infrastructure for institutional-grade tokenization.
Another notable example of this trend is CME Group's initiative to introduce tokenization technology to enhance capital market efficiency using Google Cloud's new Universal Ledger, demonstrating a tangible step towards a unified digital ledger for financial assets.
The traditional financial system often relies on multi-day settlement cycles (e.g., T+2 for equities) and slow, batch-based traditional clearance systems, like the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and Automated Clearing House (ACH), which tie up capital and introduce counterparty risk. This creates significant inefficiencies in financial markets.
Blockchain directly addresses these challenges. Transactions settle peer-to-peer on the blockchain with cryptographic finality, usually in seconds (T+0), 24/7, creating a global, always-on liquidity network. This dramatic reduction in settlement time frees up significant capital, reduces systemic risk, and enhances overall liquidity across global financial networks. This shift from multi-day to near-instant settlement is fundamental, as it unlocks capital that would otherwise be trapped in the settlement process, making financial markets more efficient and resilient.
Central Bank Digital Currencies (CBDCs) play a crucial role in accelerating this transformation. Over 98% of the world's central banks are currently researching, piloting, or deploying CBDCs. Wholesale CBDCs, in particular, are designed to enhance systemically important payments and securities transactions between financial institutions. Reports from the International Monetary Fund (IMF) indicate that CBDCs can significantly improve payment system efficiency and cross-border payments, and potentially strengthen monetary policy pass-through.
Concrete examples of this collaboration include Project Jasper (Canada) and Project Ubin (Singapore). These initiatives successfully explored the use of Distributed Ledger Technology (DLT) for the clearing and settlement of payments and securities, proving the ability for tokenized digital currencies to settle across different blockchain platforms, facilitating cross-border payments on central bank digital currencies.
These collaborative efforts between central banks and major financial institutions demonstrate a collective commitment to building a more resilient and efficient global financial system, moving away from fragmented, batch-based processes to an integrated, real-time ecosystem.
Blockchain technology, particularly through the use of stablecoins (digital currencies designed to maintain a stable value, typically pegged 1:1 with fiat currency), is fundamentally transforming cross-border payments. These digital assets bridge traditional finance and the digital asset economy, offering unparalleled transparency in transaction flows and significantly increased speed compared to traditional remittance and interbank payment methods.
This is evidenced by their remarkable growth: stablecoins reached $27.6 trillion in transaction volume in 2024, surpassing the combined annual throughput of Visa and Mastercard. The total market capitalization of stablecoins reached a record high of around $251.7 billion in early June 2025.
Regulatory clarity, such as the EU's MiCA regulation, is acting as a major catalyst for adoption, with 88% of North American firms viewing upcoming stablecoin regulations as a "green light." However, challenges remain, including fragmented global regulation and user experience friction at the fiat on/off-ramps.
To address some of these barriers, blockchain-based payment platforms are now embedding secure KYC (Know Your Customer) and KYB (Know Your Business) protocols, enabling faster, compliance-ready onboarding. Leveraging on-chain identity providers and zero-knowledge proof (ZKP) technologies, these systems offer both robust security and user privacy. In the Web3 ecosystem, a spectrum of privacy exists: transparent protocols like Bitcoin and Ethereum allow for open data access, while tools like Tornado Cash provide anonymity, Decentralized Identity (DID) aims to strike a crucial balance. As the World Economic Forum (2023) notes:
Decentralized ID attempts to strike a balance between two paths: to protect individual privacy and control while facilitating compliant access to goods and services.
This evolution, combined with stablecoins and decentralized identity, represents a new financial architecture - one that enhances global commerce with speed, transparency, and trust, while aligning with the demands of regulators, enterprises, and end users alike.
Perhaps one of the most significant impacts of blockchain is on the very foundations of accounting and audit. Blockchain's immutable ledger inherently provides a real-time, tamper-proof audit trail for every transaction. This capability substantially enhances the reliability and efficiency of financial reporting and auditing processes. As the report "Blockchain and Internal Control: The COSO Perspective" highlights:
"Given the underlying blockchain-enabled platform for implementing internal control, the work of both external and internal auditors may be facilitated by the increased automation of controls and interactions with other emerging technologies (e.g., AI, IoT). An internal control environment facilitated by blockchain may enable a more reliable internal audit environment on which external auditors may be able to better rely. Coordination of the work performed, and coverage achieved by the external and internal auditors may be enhanced."
An Ernst & Young (EY) report suggests that real-time auditing and reporting will release CFOs and their teams from certain routine, time-consuming tasks so that they can play more strategic, creative roles and focus on new ways to deliver future business value, rather than keeping track of past costs.
Deloitte indicates that blockchain will:
"…allow auditors to verify a large portion of the most important data behind the financial statements automatically. The cost and time necessary to conduct an audit would decline considerably.”
Blockchain is transforming internal audit from a reactive, sample-based approach to a proactive, continuous assurance model. Its immutability and transparency offer real-time access to complete, tamper-proof transaction records, eliminating manual reconciliation and reducing errors. This shift frees auditors from low-value tasks, allowing them to focus on high-value, risk-focused activities like analyzing complex patterns, assessing strategic risks, and providing advisory services.
History teaches us that transformative technologies rarely achieve widespread adoption overnight. From the invention of the printing press to the advent of the internet, there has always been a discernible time lag between the initial breakthrough and the moment its profound societal and business consequences become fully apparent. This period is often characterized by experimentation, gradual integration, and the overcoming of initial skepticism and infrastructural challenges. Blockchain is the latest in this lineage of foundational technologies, now poised for its mainstream adoption phase across industries, with finance leading the way.
In this era of rapid digital evolution, blockchain, especially when synergistically coupled with Artificial Intelligence (AI), is not merely an incremental improvement - it represents a fundamental shift in how financial operations will be conducted, how trust is established, and how data integrity is maintained. AI thrives on vast amounts of high-quality, verifiable data, and blockchain provides precisely that - an immutable, transparent, and auditable record that can power the next generation of intelligent financial systems. Together, they promise unprecedented levels of efficiency, security, and innovation.
The strategic imperative is clear: the digitization and unlocking of private markets are no longer optional. They are foundational for future growth and competitive relevance in finance.
At LimeChain, we understand that embracing this future doesn't require a big bang overhaul. We advocate for a pragmatic, phased approach to blockchain adoption. This begins with well-defined pilot programs and Proof-of-Concepts (PoCs) that are designed with internal audit and compliance considerations from day one. This audit-first mindset is crucial because it builds trust, demonstrates tangible value in a controlled environment, and ensures that new solutions meet the stringent requirements of regulated financial institutions and the board.
We invite you and your team of decision-makers to schedule a rapid health check workshop with our enterprise blockchain solution architects. This session and the following workshop will help you identify your organization's highest-impact pilot opportunities, charting a clear, secure path toward a blockchain-enabled future.
The digitization of private markets is crucial because traditional bank financing alone can no longer meet the escalating capital demands of the global economy. An estimated $94 trillion in infrastructure investments will be needed globally by 2040, a demand far exceeding traditional capital sources. Private markets, historically characterized by illiquidity, opacity, and limited access, create a bottleneck. Tokenization, by representing real-world assets as digital tokens on a blockchain, offers a powerful solution. It enables fractional ownership, lowers investment minimums, and enhances transparency and liquidity, thereby unlocking these markets for broader participation and sustained economic growth.
Blockchain technology offers several transformative benefits for the financial sector. These include Enhanced Risk Management & Trust through immutability, cryptographic security, and transparent shared ledgers, which significantly reduce operational and counterparty risks. It provides Faster, Clearer Data Access by creating a single, consistent source of truth, eliminating data silos and improving the timeliness and accuracy of financial information. Digital Enablement via tokenization allows for fractional ownership and access to new markets. Additionally, Automated Compliance Checks & Continuous Assurance become possible through smart contracts, enabling real-time monitoring and reducing human error. Finally, blockchain can lead to significant Cost Savings & New Revenue Opportunities by automating processes and opening up previously untapped markets.
The primary institutional barriers to blockchain adoption include complex Systems Integration and Costs with existing legacy IT, a significant Talent and Expertise Gap in professionals with both blockchain and financial domain knowledge, and a Lack of Standardized Audit and Assurance Practices due to evolving regulatory frameworks. These barriers can be overcome by stressing the strategic imperative of blockchain as a foundational technology for audit-proof, sustainable, and continuous financial innovation. A pragmatic, phased approach is recommended, starting with well-defined pilot programs and Proof-of-Concepts (PoCs) that integrate internal audit and compliance considerations from the outset. This "audit-first" mindset helps build trust and demonstrates tangible value in controlled environments.
AI models are only as effective as the data they are trained on. Without clear, reliable, and tamper-proof data, AI's potential is severely limited. Blockchain provides an ideal "touchstone" for AI by ensuring data immutability, meaning that once a transaction or data structure is recorded, it cannot be altered without creating a new, verifiable version. This append-only nature creates a comprehensive and transparent audit trail. This secure and verifiable data foundation is crucial for robust AI-driven analytics, fraud detection, and informed decision-making in financial systems, enhancing trust and cooperation rather than undermining them.
The tokenization of real-world assets (RWAs) like real estate, private equity, and commodities is a significant game-changer in asset management. By converting ownership rights into digital tokens on a blockchain, tokenization broadens investor access by drastically lowering investment minimums. It also creates the potential for active secondary markets, enabling greater liquidity for assets traditionally held for long periods. Furthermore, it provides real-time, transparent visibility of ownership and transaction history, enhancing trust and efficiency for both asset managers and investors. This unlocks new revenue streams and expands market reach for financial institutions.
Blockchain fundamentally transforms accounting and audit by providing an inherent, real-time, tamper-proof audit trail for every transaction. This significantly enhances the reliability and efficiency of financial reporting. For internal audit, blockchain enables a shift from reactive, sample-based auditing to a proactive, continuous assurance model. Its immutability and transparency offer real-time access to complete, tamper-proof transaction records, eliminating manual reconciliation and reducing errors. This frees auditors from low-value, routine tasks, allowing them to focus on higher-value, risk-focused activities, strategic analysis, and advisory services.
The strategic imperative for financial institutions is clear: the digitization and unlocking of private markets are no longer optional but foundational for future growth and competitive relevance. History shows a time lag between technological invention and widespread societal impact, and blockchain is now entering its mainstream adoption phase. A pragmatic, phased approach to blockchain adoption is recommended, starting with well-defined pilot programs and Proof-of-Concepts (PoCs) that are designed with internal audit and compliance considerations from day one. This "audit-first" mindset is crucial for building trust, demonstrating tangible value in a controlled environment, and ensuring new solutions meet the stringent requirements of regulated financial institutions and their boards.
