A structural shift is underway in global finance. The boundaries between traditional financial systems and blockchain networks are dissolving—not through replacement, but through integration. This convergence has a name: hybrid finance.
What is Hybrid finance?
Hybrid finance, a term brought by digital asset manager CoinShares, refers to the intersection of public blockchain infrastructure with established financial systems. It encompasses tokenised assets, stablecoins, institutional participation in decentralised protocols, and exchange-traded products that bridge digital and traditional markets. Rather than building a parallel economy, this evolution is enhancing existing infrastructure with programmability, transparency, and global accessibility.
For wealth managers, this isn’t abstract. The evidence is accumulating across three core pillars.
A financial framework built on three pillars
The first pillar is infrastructure and settlement. Public blockchains supporting smart contracts—primarily Ethereum and Solana—now process substantial value. These networks generated approximately $7 billion in fees during 2024. Stablecoins, the most visible application, have grown to exceed $300 billion in market capitalisation, with transaction volumes rivalling Visa and Mastercard combined. The US GENIUS Act, which classifies compliant stablecoins as non-securities requiring Treasury-backed reserves, has accelerated institutional adoption.
Decentralised exchanges represent another major use case. Monthly trading volumes now exceed $600 billion—far beyond the speculative activity of 2021 and reflecting structural, persistent demand. When Solana processed $40 billion of trading volume in a single day with stable fees and no significant delays, it demonstrated that these systems can handle institutional-scale settlement.
The second pillar is tokenised real-world assets. After years of pilot programmes, this market has begun scaling meaningfully—from roughly $15 billion at the start of 2025 to more than $35 billion today. Private credit leads the growth, followed by US Treasury tokenisation. BlackRock’s BUIDL tokenised money market fund exemplifies the shift: investors deposit USDC, receive tokens representing their position, and earn automatic monthly distributions through smart contracts. Redemptions are near-instant and trading is available outside normal market hours.
Tokenised deposits are emerging alongside stablecoins. Unlike stablecoins, which don’t pass through yield from their underlying reserves, tokenised deposits can transmit interest back to holders. J.P. Morgan has launched tokenised deposits on an Ethereum Layer-2 network, a pilot with considerable long-term implications.
The third pillar comprises revenue-generating decentralised applications. Historically, most crypto tokens didn’t represent ownership or a claim on revenue. This is changing. Several protocols now generate hundreds of millions of dollars annually with lean teams, operating with margins that traditional financial firms would envy. Hyperliquid, a perpetual futures platform, uses 99% of its revenue for daily token buybacks, creating a direct link between platform performance and token value.
How to reflect Hybrid finance in a portfolio?
What does this mean for portfolio allocation? The opportunity lies not in speculation but in accessing this structural change through regulated vehicles. Physical ETPs backed by digital assets, funds holding tokenised securities, and exposure to platforms generating genuine cash flows all represent entry points.
The risks remain real. Regulatory frameworks are still developing. Interoperability across blockchain networks is incomplete. Custody solutions continue to mature. But the direction of travel is clear.
Industry forecasts for tokenised assets range from several trillion to $30 trillion by 2030. The exact magnitude is uncertain, but consensus holds that the market will be orders of magnitude larger than today. For advisers, the question is no longer whether to engage with this transition, but how.
Hybrid finance is not replacing traditional markets. It is making them faster, more global, and more programmable. The foundations are in place and adoption is accelerating.