Asia retains crypto liquidity, but US Treasury unlocks institutional funds

Opinion: Jack Lu, CEO of Bouncebit

For years, Crypto has promised a more open and efficient financial system. There is still a fundamental inefficiency. It's a disconnect between the US capital market and the Asian liquidity hub.

The US controls capital formation, and the recent tokenized Treasury Department and real-world assets embrace exemplifies key steps towards blockchain-based finance. Meanwhile, Asia has historically been a global crypto trading and liquidity hub despite evolving regulatory changes. However, these two economies operate in silos, limiting the way capital moves seamlessly into digital assets.

This is not just an inconvenience. It is a structural weakness that prevents cryptography from becoming a true institutional asset class. Solving that creates a new era of structured liquidity, making digital assets more efficient and attractive to institutional investors.

Capital Bottleneck Holding Crypto

The inefficiency between the US capital markets and the Asian crypto hub is attributed to regulatory fragmentation and a lack of institutional grade financial products.

US companies are hesitant to bring on tokenized Treasury on-chain due to the burden of evolved regulations and compliance. Meanwhile, Asian trading platforms operate in a different regulatory paradigm, with fewer barriers to trading but limited access to US-based capital. Without a unified framework, cross-border capital flows remain inefficient.

Stablecoins bridges traditional finance and crypto by offering a blockchain-based alternative to Fiat. They are not enough. The market needs something equivalent to just a Fiat. To function efficiently, you need institutionally reliable assets with yields, such as the US Treasury Department and bonds. Without these, institutional capital is hardly present in the crypto market.

Cryptocurrency requires universal collateral standards

Cryptography must evolve beyond simple tokenized dollars and develop structured, yield-holding equipment that institutions can trust. Crypto requires global collateral standards that link traditional funds to digital assets. This standard must meet three core criteria:

First, you need to provide stability. Institutions do not assign meaningful capital to asset classes that lack a robust foundation. Therefore, collateral must be supported by real-world financial products that provide consistent yields and security.

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Second, it needs to be widely adopted. Just as Tether's USDT (USDT) and USDC (USDC) have become the de facto standard for FIAT-backed Stablecoins, facility liquidity requires assets that hold widely accepted yields. Market fragmentation lasts without standardization and limits Crypto's ability to integrate with the broader financial system.

Third, it must be negative. These assets must be configurable and interoperable between blockchain and exchange, allowing capital to move freely. Digital assets remain locked into separate liquidity pools without on-chain integration, hindering efficient market growth.

Without this infrastructure, Crypto will continue to operate as a fragmented financial system. Institutions need a seamless, compliant pathway for capital deployment to ensure that both US and Asian investors have access to financial products that are tokenized based on the same security and governance standards.

Establishing a structured framework that aligns crypto liquidity with institutional financial principles will determine whether digital assets can truly expand beyond current limits.

The rise of institutional grade crypto liquidity

A new generation of financial products are beginning to solve this problem. Tokenized Treasury, like Buidl and USYC, serve as stable and valuable yield generation assets, providing investors with on-chain versions of traditional fixed income products. These devices offer alternatives to traditional stubcoins, allowing for more capital-efficient systems that mimic traditional money markets.

Asian exchanges are beginning to incorporate these tokens, providing users with access to yields from the US capital market. But beyond mere access, a more important opportunity lies in packaging crypto exposure along with tokenized US capital market assets in ways that are accessible and meet institutional standards in Asia. This allows for a more robust, compliant, scalable system that connects traditional finance with digital finance.

Bitcoin has evolved beyond its role as a passive store of value. Bitcoin-backed financial products allow you to take Bitcoin (BTC) as collateral, unlock liquidity while generating rewards. However, in order to function effectively within the institutional market, Bitcoin must be integrated into a structured financial system tailored to regulatory standards, making it accessible and compliant for investors across the region.

Centralized distributed finance (DEFI), or “CEDEFI,” is a hybrid model that integrates centralized liquidity with Defi's transparency and complexity, another important part of this transition. For this to be widely adopted by institutional players, it must provide standardized risk management, clear regulatory compliance and deep integration with traditional financial markets. Ensuring that CEDEFI-based equipment (e.g., tokenized Treasury, BTC re-exiting, or structured lending) operates within the framework of a recognized institution is important to unlock large-scale liquidity.

The key shift is not just about the symbols of assets. It is creating a system in which digital assets can act as effective financial products that institutions recognize and trust.

Why is this important?

The next stage in Crypto's evolution relies on its ability to attract institutional capital. The industry is at a turning point. Unless Crypto establishes the foundation for a seamless capital movement between traditional markets and digital assets, it will struggle to acquire long-term institutional adoption.

Bridging US capital with Asian liquidity is not just an opportunity, it is a need. The winners in this next phase of digital asset growth are projects that resolve the fundamental flaws in liquidity and collateral efficiency, laying the foundation for a truly global and interoperable financial system.

Crypto is designed to be borderless. Now it's time to make that fluidity borderless.

Opinion: Jack Lu, CEO of Bouncebit.

This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph's views and opinions.