By Nirup Ramalingam, CEO, BridgePort
We often think of our financial markets as the pinnacle of modern efficiency. But as Tuongvy Le and Austin Campbell point out in “Crypto and the Evolution of the Capital Markets,” today’s securities infrastructure is actually a 1970s-era system held together by decades of regulatory patches and intermediary layers. Rather than dismissing blockchain as just another crypto trend, they argue it represents the first real opportunity to build capital markets from the ground up—addressing the inefficiencies, opacity, and rent-seeking that our current system was designed around, not designed to solve.
The “Rube Goldberg Machine” of Today’s Markets
The paper traces the current market structure back to the “paperwork crisis” of the 1960s, when Wall Street literally couldn’t keep up with trading volume using manual processes and physical stock certificates. The solution? Layer upon layer of intermediaries and regulations built up over decades. While these were necessary fixes at the time, the authors argue the result is a system that’s often inefficient, opaque, and burdened by “entrenched rent-seeking, conflicts of interest, and systemic concentration.
Consider what happens in a single securities transaction today: your order might flow through a retail broker, to a market maker, through a dark pool, to an exchange, then to a clearinghouse, a depository, and finally a transfer agent—each step adding time, cost, and potential points of failure. It’s a system that made sense when computers filled entire rooms, but feels increasingly antiquated in an era of smartphones and cloud computing.
Blockchain: Cutting Out the Middleman
Le and Campbell make a compelling case: what if we could redesign capital markets from scratch with today’s technology? Blockchain, they argue, offers three game-changing advantages that directly address the pain points of our current system:
Speed and Cost: Why wait T+1 for settlement when blockchain transactions can settle in minutes? By enabling direct peer-to-peer transactions, companies could drastically reduce the fees paid to multiple intermediaries while accelerating deal completion and cash flow.
Real-Time Transparency: Instead of relying on periodic reports and reconciliations across multiple parties, blockchain provides a single, real-time source of truth. Every transaction is instantly verifiable, potentially eliminating costly disputes and lengthy audit processes.
Operational Resilience: Rather than depending on a handful of critical infrastructure providers, decentralized networks distribute risk across thousands of nodes. No single point of failure means better business continuity and reduced systemic risk.
The authors put it perfectly: “If blockchain technology had existed in the 1960s, the entire structure of our capital markets might look very different today.” The question for business leaders isn’t whether this change is coming—it’s whether they’ll lead it or be disrupted by it.
Beyond Retrofitting: Designing for the Future
Crucially, the paper advocates against simply trying to force old rules onto this new technology. Instead, it calls for a new framework that preserves blockchain’s core benefits while addressing its unique challenges. This isn’t just about how crypto assets are traded today, but about “the capital markets of tomorrow, where traditional securities and investment products will inevitably move on-chain”.
As the paper concludes, “We’ve been handed another chance to design it right. Let’s not build tomorrow’s system with yesterday’s tools”.
This is a powerful call to rethink the very plumbing of our financial system. It suggests that the true potential of crypto and blockchain lies not just in new assets, but in fundamentally upgrading how all assets are owned and traded.
(Based on “Crypto and the Evolution of the Capital Markets” by Tuongvy Le and Austin Campbell, May 12, 2025: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5250986)
