The ‘Plumbing’ Phase: DLT Moves from Hype to Core Infrastructure
This week, the shift from DLT as a “fringe experiment” to “foundational infrastructure” became undeniable. The hype is subsiding, replaced by measurable adoption. A recent study highlights that 36% of capital markets stakeholders now have live DLT solutions, a massive leap from just 4% in 2020.
This isn’t about speculation; it’s about operational value.
1. Institutional Confidence and Infrastructure Rollouts
The world’s largest financial players are no longer just commenting on digital assets; they are building with them.
- BNY Mellon’s Efficiency Play: BNY Mellon, a custodian of trillions in assets, is framing blockchain as a core operational upgrade. Its CEO emphasized DLT’s role in enabling 24/7 transactions and, crucially, improving the flow of collateral across markets.
- UK’s Dual Push (Central Bank & Regulator):
- The Bank of England published its new strategy covering AI, DLT, and quantum computing. It also tempered concerns about stablecoins, indicating that initial limits on holdings (to prevent bank runs) may be temporary.
- The UK’s Financial Conduct Authority (FCA) unveiled proposals to allow the tokenisation of investment funds, including a “direct to fund” model to modernize its asset management industry.
- France’s On-Chain Equity Market: France approved “Lise,” the country’s first fully tokenized equity exchange. Lise will combine trading and settlement on a single DLT, aiming for its first on-chain IPOs in 2026.
- LSEG & Microsoft Go Live: The London Stock Exchange Group (LSEG), in partnership with Microsoft, rolled out its blockchain-based platform to support private fund issuance and settlement, another major piece of DLT financial plumbing.
2. Cross-Sector Use Cases: AI and Autonomous Agents
Beyond finance, DLT is being designed as the trust layer for the next generation of AI and IoT.
- Economies for AI Agents: A new architecture for “agent-to-agent” economies proposes using DLT to anchor identity and handle micropayments, allowing autonomous AI agents to coordinate and transact securely.
- Trustworthy Federated Learning: Researchers are combining blockchain with federated learning to build trust in distributed AI training. This embeds reputation tracking and reduces reliance on a central aggregator. Advanced frameworks like AutoDFL are even using zk-Rollups to improve the cost and throughput of these decentralized AI systems.
3. Regulatory Architecture Catches Up
As DLT becomes embedded, regulators are moving from theory to practice.
- United States:
- The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) is now law, creating a clear framework that is fueling institutional confidence.
- California passed SB 822, a novel law that protects unclaimed crypto from being automatically liquidated by the state, mandating custody in its original form.
- New York City established a Digital Asset & Blockchain Office to embed oversight and strategic development directly into city policy.
- United Kingdom:
- The FCA’s tokenization roadmap is paving the way for regulatory modernization, confirming that existing rules already permit tokenized fund units while planning for future evolution.
4. Risks and Real-World Friction
This acceleration also brings complex challenges to the forefront.
- The $25M MEV Exploit Trial: Two MIT-educated brothers are on trial for an alleged $25 million flash MEV exploit that took 12 seconds. The case highlights the critical, fuzzy boundary between an ingenious trading strategy and criminal theft in an evolving legal regime.
- “Tokenization” vs. Investor Rights: Critics are warning that not all “tokenized” securities are created equal. Many may not properly embed legal investor rights, creating dangerous gaps in custody, transparency, and governance that issuers could exploit.
5. Societal Upsides: From Property Rights to Market Access
Amid the risks, DLT is delivering tangible public value.
- Securing Land Rights in India: The government of Kerala announced it will use blockchain-based land records (“One Title – One Truth”) to create an immutable record of ownership. The goal is to achieve a land-dispute-free future by 2031, making fraud and forgery significantly harder.
- Democratizing Finance: The UK’s tokenization push and France’s Lise exchange both point toward lowering friction in capital markets. This can increase inclusion for smaller issuers and democratize access to investments.
- Accountable AI: Embedding DLT into AI ecosystems helps align autonomy with accountability, building a foundation for decentralized systems that are not just efficient, but trustworthy.
Bottom Line
This week reaffirmed that DLT is shifting from speculative frontier to foundational infrastructure. The firms that succeed will be those that combine technical excellence with rigorous legal, audit, and trust architectures.