Huobi Growth Academy | TradFi Deep Research: The Wave of Convergence Between Crypto and Traditional Finance

1. Definition of TradFi and the Evolution of Crypto

TradFi, or Traditional Finance, in the crypto context specifically refers to the practice of introducing traditional financial assets—including stocks, bonds, commodities, foreign exchange, ETFs, etc.—into the crypto market for trading via tokenization or synthetic assets.

This concept did not emerge in 2026, but its development has gone through three distinct phases.

The first phase, from 2020 to 2022, was the "Synthetic Asset Experimentation Period." During this time, Mirror Protocol and Synthetix first launched on-chain synthetic stocks, while FTX and Binance offered tokenized stock trading services through partnerships with licensed brokerages. However, the 2022 FTX collapse, combined with a global tightening of crypto regulations, forced most tokenized stock services offline, ending this phase with an industry consolidation.

The second phase, from 2023 to 2024, was the "Treasury-First Period." Amid the Fed's aggressive rate hikes, DeFi protocols like MakerDAO began using U.S. Treasuries as underlying RWA assets. BlackRock launched its BUIDL fund in March 2024 with an initial seed of $100 million, which rapidly grew to over $1 billion within months, marking the official entry of Wall Street giants.

The third phase, from the second half of 2025 to the present, is the "Full Asset Acceleration Period." Tokenized stocks have re-entered a growth curve: MyStonks has completed U.S. STO compliance filings, Backed Finance has issued real asset-backed xStocks on nine chains, and traditional custodians like Fidelity and UBS have begun participating. More importantly, crypto exchanges are no longer satisfied with merely listing tokenized assets; they are directly launching TradFi perpetual contract products, introducing traditional assets like stocks, gold, and treasuries into the 24/7 on-chain trading ecosystem as derivatives.

HTX, as a veteran platform in the crypto industry, has taken an early lead in this phase by launching a line of TradFi perpetual contracts, starting with core U.S. stock assets like NVDA, AAPL, MSFT, META, and SPY. This provides crypto users a new pathway to trade core global assets without leaving the on-chain ecosystem.

The internal logic of this evolution is clear: the crypto market needs new incremental capital and user groups, and traditional financial assets are the most effective bridge connecting the world's $75 trillion stock market and $130 trillion bond market. For HTX, the introduction of TradFi assets represents a strategic upgrade from a crypto-native platform to a full-asset trading platform.

2. Market Structure and Competitive Landscape

The current crypto-ization of TradFi presents a competitive landscape with three parallel tracks.

The first track is "Tokenized Real Assets," represented by BlackRock BUIDL, Ondo Finance, Backed Finance, and MyStonks. These assets exist on-chain as ERC-20 tokens, are backed 1:1 by underlying real assets, and managed by licensed custodians. BlackRock BUIDL, with $2.3 billion in AUM, dominates the tokenized treasury sector, holding an estimated 25% to 30% market share. Ondo Finance's OUSG has grown to multi-billion dollar levels. Backed Finance's xStocks operate on nine chains, requiring no KYC but restricted to whitelisted addresses.

The second track is "TradFi Derivative Perpetuals," the fastest-growing segment in 2026. Coinbase launched U.S. stock perpetuals in March 2026 for non-U.S. users, supporting stocks like Apple, Microsoft, Nvidia, and Tesla, as well as ETFs like SPY and QQQ, offering leverage up to 10x for individual stocks and 20x for ETFs, settled in USDC with 24/7 trading. HTX has also listed TradFi perpetuals for NVDA, AAPL, MSFT, META, and SPY, providing globalized U.S. stock derivative trading services settled in USDT. Hyperliquid, through its HIP-3 protocol, holds a 28.6% market share in the RWA perpetual sector. The trading volume for RWA perpetuals in Q1 2026 reached $524.8 billion, already surpassing the full-year 2025 volume of $313 billion.

The third track is "Comprehensive TradFi Trading Infrastructure," aiming to provide a unified interface for trading both traditional and crypto assets. Some leading platforms access CFDs through third-party systems like MT5, while others have developed their own index-based perpetual contracts, packaging multiple traditional assets into indices for trading.

From a market data perspective, the tokenized RWA market reached a TVL of $31-34 billion in May 2026, nearly three times the approximately $11 billion from a year earlier. Tokenized gold increased from $1.43 billion to $5.55 billion, a 289% jump; tokenized stocks surged from $2 million to $486 million, a growth of over 200 times. BCG predicts the global tokenized asset market could reach $16 trillion by 2030, about 10% of global GDP; McKinsey offers a more conservative estimate of around $2 trillion. Regardless of which forecast proves accurate, the current market size has the potential for tens to hundreds of times growth relative to the long-term outlook.

3. Analysis of Core Risks

Despite its promising future, the crypto-ization of TradFi faces significant risks that are both potential pitfalls for investors and core challenges requiring careful management by platform operators.

First is compliance and regulatory risk, the biggest source of current uncertainty. Tokenized securities are, by nature, securities offerings and must adhere to national securities laws. The U.S. SEC's stance on on-chain securities remains ambiguous; the fact that Coinbase's U.S. stock perpetuals are only available to non-U.S. users reflects this regulatory complexity. Fragmented cross-border regulation means that the same tokenized asset may face completely different compliance requirements in different jurisdictions, posing a continuous compliance challenge for globally operating crypto exchanges. HTX, in deploying its TradFi perpetuals, must also navigate the operational complexity arising from regulatory differences across regions.

Second is liquidity risk. While the trading volume of RWA perpetuals reached $524.8 billion in Q1, the total market capitalization of tokenized spot stocks is only $486 million, highlighting a significant imbalance in liquidity depth between spot and derivatives. This structural liquidity mismatch could lead to severe price swings during extreme market conditions, increasing the risk of liquidation for traders. Furthermore, the mismatch between U.S. stock trading hours and the 24/7 crypto market can lead to insufficient price discovery during off-hours, increasing slippage and the risk of abnormal volatility.

Third is smart contract and technical risk. Tokenized assets depend on the precise execution of smart contracts, and any contract vulnerability can lead to asset loss. Although institutional-grade products like BlackRock BUIDL use compliant platforms like Securitize for technical support, tokenized assets at the DeFi protocol level still face risks such as inadequate contract audits and oracle manipulation.

Fourth is custody and settlement risk. Tokenization of real assets requires a reliable custodian as backing. If the custodian faces credit risk (e.g., a repeat of the FTX incident), token holders could be unable to redeem the underlying assets. While mainstream solutions now involve traditional custodians like Fidelity and UBS, the legal relationship between on-chain tokens and off-chain assets lacks clear legal precedent in many jurisdictions.

Fifth is exchange rate and interest rate risk. TradFi perpetuals are typically settled in USDT or USDC, but their underlying assets are denominated in USD. Exchange rate fluctuations can affect the real returns of non-USD users. Simultaneously, changes in the Federal Reserve's interest rate policy can directly impact U.S. stock prices, which in turn influences the price volatility of TradFi perpetual contracts.

4. Innovation Trends and Sector Opportunities

The TradFi crypto-ization sector is witnessing four major innovation trends, presenting strategic growth opportunities for exchanges like HTX.

Trend One is the rapid expansion of the perpetual product matrix. Following Coinbase's pioneering launch of U.S. stock perpetuals, more crypto exchanges are integrating these products, expanding from an initial 5-10 blue-chip stocks towards semiconductor ETFs, crypto-concept stocks, and sector-themed ETFs. HTX has already listed contracts for NVDA, AAPL, MSFT, META, and SPY, and is poised to cover more TradFi assets, building a comprehensive matrix for trading core U.S. stock assets. Exchanges that can establish a complete TradFi product matrix first will gain a first-mover advantage in user acquisition and trading fee revenue.

Trend Two is the maturation of institutional-grade infrastructure. BlackRock BUIDL's rapid growth from $100 million in seed funding to $2.3 billion in AUM, along with its filing for two new tokenized funds signaling a shift towards a product family, demonstrates the long-term commitment of top Wall Street institutions to tokenization. The participation of traditional custodians like Fidelity and UBS, and the one-stop services from compliant platforms like Securitize (KYC, whitelisting, on-chain issuance and redemption), are lowering the entry barrier for institutions. Franklin Templeton's Benji Fund has been operating continuously since 2021, and Ondo Finance's OUSG has grown to multi-billion dollar levels, indicating an initial formation of an institutional tokenized product line. This institutional push means that TradFi crypto-ization is moving from "fringe experiment" to "mainstream allocation," enhancing the value of crypto exchanges as gateways connecting institutional capital with on-chain assets.

Trend Three is the rise of Permissioned DeFi Pools. This is the most noteworthy structural innovation in the RWA space in 2026. Institutions are creating KYC/AML whitelisted DeFi liquidity pools on public blockchains, allowing qualified participants to trade tokenized treasuries 24/7 while enabling automated compliance checks via smart contracts. This model retains the composability and efficiency advantages of DeFi while satisfying regulatory requirements for investor suitability, making it a key bridge for large-scale institutional entry. Trend Four is the gradual clarification of the regulatory framework. The EU's MiCA regulation takes full effect in July 2026, the U.S. GENIUS Act was enacted in March 2025, 72 jurisdictions globally have established crypto asset regulatory frameworks, and 58 countries have adopted the FATF Travel Rule. Regulatory certainty is shifting from "grey area" to "clear rules," providing an institutional foundation for the long-term development of TradFi crypto-ization. For HTX, this regulatory clarity allows for more confident investment in building its TradFi product line without the fear of sudden policy reversals causing business disruption.

5. Participation Strategies and Investment Logic

For investors, the TradFi crypto-ization sector offers multiple layers of investment participation.

The first layer is directly trading TradFi perpetual contracts. Platforms like HTX have listed U.S. stock perpetuals, allowing investors to use USDT as margin and trade assets like NVDA, AAPL, and SPY with leverage, 24/7. The advantage here is a low entry barrier, allowing trading of core global assets without needing a traditional brokerage account. However, one must be mindful of funding rate fluctuations and forced liquidation risks, especially the mismatch between U.S. stock trading hours and the crypto market's 24/7 cycle, which can lead to insufficient price discovery and increased risk.

The second layer is investing in protocol tokens of the RWA sector. Ondo Finance (ONDO), a leading protocol in the tokenized treasury space, has a token value positively correlated with the growth of its on-chain treasury assets. Other RWA infrastructure protocols like Centrifuge are also worth watching. The third layer is investing in crypto exchanges that provide the TradFi trading infrastructure.

With the explosive growth of TradFi perpetual trading volumes—reaching $524.8 billion in Q1 2026—exchanges listing these products directly benefit from increased trading fee revenue. By listing U.S. stock perpetuals, HTX is opening up the incremental $75 trillion U.S. stock market, which has structural significance for its platform revenue and user growth.

It is particularly important for investors to evaluate the compliance credentials and risk management capabilities of exchanges. Coinbase, as a Nasdaq-listed company, has a natural advantage in compliance; other exchanges mitigate direct regulatory conflicts by primarily targeting non-U.S. users. In terms of risk warnings, TradFi crypto-ization is still in its early stages. The liquidity depth of tokenized assets is far from that of traditional markets, and price discovery mechanisms are not yet mature. Investors should strictly manage position sizes, prioritize tokenized products backed by real assets, and avoid highly leveraged synthetic assets lacking a compliance foundation. They should also be mindful of the impact of exchange rate fluctuations on non-USD users and the transmission effect of Fed interest rate policy changes on U.S. stock market trends.

6. Conclusion and Outlook

TradFi crypto-ization is reshaping the boundaries of the crypto industry. From the synthetic asset experiments of 2020, to the institutional entry of BlackRock's BUIDL in 2024, to the comprehensive rollout of U.S. stock perpetuals by exchanges like Coinbase and HTX in 2026, this sector has progressed from "proof-of-concept" to "product matrix" in just six years.

The current key data is already striking: RWA market TVL has surpassed $31 billion, quarterly trading volume of RWA perpetuals exceeds $500 billion, the market cap of tokenized stocks has grown over 200 times in one year, and Wall Street giants like BlackRock have integrated tokenization into their core product strategy.

Standing at the midpoint of 2026, we believe TradFi crypto-ization is still in the "early acceleration phase of its growth curve." Despite the vast gap between BCG's forecast of $16 trillion and McKinsey's conservative estimate of $2 trillion, even the conservative figure implies tens of times more growth from the current market size. In the short term, the expansion of the U.S. stock perpetual product matrix, the institutional deployment of Permissioned DeFi Pools, and the full implementation of regulatory frameworks like MiCA will serve as three major catalysts driving market growth.

As a significant participant in the crypto industry, HTX has secured a favorable position in this sector by listing TradFi perpetuals for NVDA, AAPL, MSFT, META, and SPY. Looking at the medium to long term, when the trading depth and user experience of TradFi assets on-chain reach parity with traditional brokerages, crypto exchanges will truly complete their transformation from "crypto asset platforms" to "full-asset trading infrastructure." This is not merely a technological upgrade but a fundamental paradigm shift in financial infrastructure. For HTX users, this means an era is dawning where one single account enables trading both crypto assets and core global traditional assets.