Kristin Myers: Now, for years, Wall Street has been experimenting with blockchain, tokenized bonds, tokenized funds, digital cash. But the experiment may now be over.
So now here comes the hard part: making all of it actually work with the financial system that we already have.
Because SWIFT, that's the existing system that connects banks, isn't disappearing tomorrow, and neither are the banks or the clearinghouses or the existing payment rails.
And that means Wall Street may have to run on two systems at once. That's going to be the old one and the new one.
Now, today's guest has spent more than two decades working with financial institutions and has just helped study how that transition could actually happen.
Ben-Hur leads blockchain and digital assets for financial services at Deloitte, and the road from today's markets to tomorrow's starts right now.
Roy Ben-Hur: Thank you for having me.
Kristin Myers: Wall Street is racing toward a future where money and assets can move 24 hours a day, seven days a week, 365 days a year.
That's tokenized assets, stablecoins, digital deposits, blockchain settlement.
But there's one big problem: the old financial system isn't going away.
Banks still depend on infrastructure like SWIFT and Fedwire, meaning the future of finance may have to run on two systems at once.
Roy Ben-Hur leads blockchain and digital assets for financial services at Deloitte.
A new report from Deloitte, Global Digital Finance, and the FIX Trading Community says the next challenge isn't proving blockchain works. It's getting everything to work together.
The report says common standards, trusted digital money, and interoperability could determine whether tokenized finance can finally reach institutional scale.
So here's the billion-dollar question: Can Wall Street connect decades-old financial infrastructure with a market that never closes without breaking the system in between?
From Startup to Stock Exchange, Roy Ben-Hur is next.
Joining us now at the desk is Roy Ben-Hur, Managing Director and Digital Assets Financial Services Leader at Deloitte.
Roy, thank you so much for joining us today. Happy Friday.
Roy Ben-Hur: Happy Friday. Thank you for having me. It's a beautiful day in New York. Of course, you're walking outside the New York Stock Exchange coming here. Just to raise that, I know.
Kristin Myers: I'm so excited to have you here on the floor of the Stock Exchange.
So I want to talk a little bit about some of your experience.
Now, you've spent years essentially watching financial firms experiment, for lack of a better word, you might have a better one, with blockchain.
But you guys actually have a new report that really suggests we're moving beyond that experiment.
So what's really changed over the last couple of years?
Roy Ben-Hur: I think we've seen a couple of items that move across.
And I think, to your point, we have moved away from the experimentation or pilot stage into the understanding that adoption is here.
And I would caveat the shift into a number of areas.
Clearly, the underlying technology has scaled enough to allow for the volumes and capabilities that financial services institutions need now, which is also coupled with regulatory clarity and direction that's coming across in the U.S. with the U.S. regulators, but also globally with the global regulators.
Which makes the players want to use this underlying technology, in many cases, to replace legacy systems or complement legacy systems, to feel comfortable integrating with the technology.
Kristin Myers: So looking at your report, the big idea is, I'm going to quote this here, "convergence, not replacement."
So what does Wall Street really look like essentially during that transition, during that convergence?
Roy Ben-Hur: Wall Street will look like, I think, as you mentioned earlier, potentially running dual technology stacks or multi-stack, each stack geared toward what's the optimal solution.
But if you think about it from a Wall Street perspective, the Wall Street end user should not care whether I'm using a DLT-based platform, right, or I'm using, I'll call it, an existing platform.
Their view is, which one provides me with the better functionality? Which one enables me to get to my end goal faster, cheaper? Which one services my end clients as well?
And that's the Wall Street of the future.
Kristin Myers: So I, as a client, let's say I buy a tokenized security.
And to your point, I might not actually care how the plumbing actually works. I just need it to work.
But for those that are watching, let's say they go and they buy that tokenized asset. What part of that is actually on the blockchain? And where in the process does it move to the sort of, you know, the older system?
Roy Ben-Hur: A lot of it depends on the product. A lot of it depends on the underlying capabilities that each firm has. So it's a broad statement.
But think about it this way: You want to buy a product. Let's say you want to trade it overnight.
Our markets are moving to 24x5 in December. They'll move to 365, then move to a longer-term, potentially 24x7x365 in a couple of years.
And you want to interact with that product overnight.
If you have a product that's tokenized, that's liquid, that's what you need.
Do you really care whether it's tokenized or not? No.
But because you need it to operate overnight, it will need to be. It will need to operate on-ledger.
From the underlying technology in the background, you will need the clearing and settlement underlying systems to enable you to operate on blockchain.
That's going to be the changes.
Kristin Myers: You know, it's great that we're actually chatting with you today because we had two guests this week that are both creating technologies, blockchain technologies, that essentially are helping move the financial system much more quickly and also much more efficiently.
That, of course, would be Kevin Miao of Tare and also Lamine Brahimi of Taurus.
And I'm curious to know, because we asked them this question about their sort of growth and their expansion plans.
But in your experience, this sort of transition, is it sort of even across the board?
Is it almost, if we're looking at the graph, the sort of uptick in this sort of technology, is it spread across the board, or is there a lot of segmentation?
Is it a lot of the bigger banks that are picking up on this sort of new technology to connect those old parts of the plumbing to the new?
How are you seeing this sort of industry and the uptake of this?
Roy Ben-Hur: So I'll put it into probably three categories right now.
You most likely see the big U.S. banks, the G-SIBs and the like, who have done experimentation, most of them, for the last couple of years.
We are now moving ahead and really moving this more into a full-scale, blown set of capabilities.
The second tier, if you think about it from, again, I'm thinking about it from a U.S. perspective, is the regional midsize bank.
And there, it varies. A lot of them just don't have the breadth and scale of technology capabilities to do that.
And in their case, in many cases, they rely on what I'll define as the consortia that are operating in the space, be it either for tokenized deposits or stablecoin or even tokenized securities.
And then if you take a step further down, we have the community banks, and there it varies.
Most of them clearly want to look at, understand, you know, how is this enabling me to better support my clients?
They have a stablecoin issue that's coming across, which intersects within a couple of months.
How am I protecting my deposits? And who are the players that can really help me as a community bank who doesn't have the capabilities to do that?
In their case, it's less about the underlying technology. It's the business partner or business technology partner that can enable them to scale.
Kristin Myers: So I'm actually curious.
That made me think, you mentioned U.S. banks in particular.
I'm curious to know if you have insight, because U.S. financial services has traditionally lagged their counterparts in Europe, for example, and in Asia.
Are you seeing that as well with this sort of new technology, moving things onto things like blockchain?
Are U.S. banks way behind? Because obviously the global banking system is becoming even more global with every single day.
Roy Ben-Hur: You may have said that probably 18 months ago or 24 months ago.
What we have seen in the U.S. over the last 12 to 18 months is a pickup of innovation, a pickup of exploration of what is happening in this space.
And in many cases, the U.S. caught up, or the U.S. actually has gone ahead with what we are seeing, again, with your European and Asia-Pacific partners.
It is use case by use case, but broad statement, we'll say probably we're equal or ahead in some areas.
Kristin Myers: So you mentioned, right, that we're moving from this 24x5, might be 24x7x365.
Is that the problem that we're solving right now? This capacity to trade and to bank every single day, every single hour?
Is that what we're solving by tokenizing, or are there other problems that we're solving?
Roy Ben-Hur: So there are a number of issues that we're solving.
And probably you want to start with tokenization is not a hammer looking for nails.
So you need to be specific about the use cases that are supporting for that and the use cases that don't enable us to scale.
You mentioned trading 24/7, 365, or 24x5 in December of this year in the U.S.
But the other, more acute use cases where you see in the market is collateral optimization, where your ability to use tokenization enables you to release collateral that's locked today.
And instead of having it locked overnight, you can use it in segments of 15 minutes to an hour, to, you name it, how much you need the collateral.
The other key use case is around repo and the use of optimizing repo for tokenization.
So the answer would be, the financial institutions looking at it need to understand where are these pain points and where would be the biggest return on their investment if they select to do that?
Because if you're not a trading organization, clearly 24x5 or 24x7 will not be something of interest to you.
Kristin Myers: Here is the problem that Wall Street is trying to solve.
Imagine a bond that exists as a digital token.
Now, the asset can move on a blockchain, but the buyer's cash may still live in a real-life bank account.
Now, that bank may use traditional payment rails. The custodian might use another system. And the records may have to talk to the clearing and settlement infrastructure that was built long before blockchain even existed.
So tokenizing the asset doesn't automatically tokenize the rest of the transaction.
So for the next several years, that means two financial systems may have to operate side by side: the old rails and the new digital ones.
But the hard part isn't just building both. It is making sure that money, assets, and information can move between them without breaking the trade.
That is interoperability.
And according to Deloitte, Global Digital Finance, and the FIX Trading Community, that may be one of the defining infrastructure challenges of the next generation of the financial market.
We're back now with Roy Ben-Hur of Deloitte.
So, Roy, let's talk about the other half of the trade, which, of course, is going to be the money.
So let's just say, you know, imagine that we tokenize every stock, every bond in the world, right?
But if the cash isn't on the same rails, what good is tokenizing all of those assets?
Roy Ben-Hur: If the cash is not on the rail, it means that we really have not solved the problem, right?
Because the asset will travel. The delivery will be done atomically.
But then we are relying on legacy processes, batch processes, to have the cash move across, you know, between the Fed systems and other systems that are enabling the movement of money.
Now, will this journey, as we are referring to, mean that on day one we need all cash tokenized?
The answer is probably not.
The answer will be, you will get there gradually.
You will get part of the finality of the transaction agreed upon where the cash leg does operate on legacy rails.
But gradually, we will see the cash leg being augmented with either tokenized deposits or stablecoin that will enable even faster and more secure transactions.
Kristin Myers: So it sounds like we're moving more quickly on one end of the equation than we are on the other.
We're moving faster to tokenizing the assets than we are to the cash that might be used to pay for it.
Roy Ben-Hur: The answer is an answer in a consulting way: depends.
It really depends on your underlying technology and what type of money you're using to move it.
There are some platforms that do support already tokenized cash on-ledger, and some do not.
And it really depends on how your architecture works.
But it goes back to the notion of convergence, where what is the best approach, or where is the best solution that fits your need as the one operating it?
Whether it's, I need the tokenized transaction to happen now, or I can do the clearing and then do the netting on the cash side, you know, a couple of times during the day.
And I really don't need that cash right away in front of me at the point of execution, of the delivery.
Kristin Myers: So there's multiple ways of doing this, right?
You have stablecoins. You've got tokenized bank deposits, central bank digital currencies.
Is there any distinction for an institution that might be moving millions and billions of dollars? Is there a big difference?
Roy Ben-Hur: Clearly. Yeah, clearly.
I mean, the underlying distinction is risk and what's backing that asset.
So we'll start with central bank digital currency. By the middle name of it, it's a currency that's issued by the central bank.
It's equivalent to central bank money, so it's the riskless asset.
A tokenized deposit is a deposit that's issued by the bank.
It carries the same capabilities and the same legal requirements as deposits that exist today.
The only difference is it is on-ledger. It can operate 24/7.
In that sense, if we are two different banks and we are transacting tokenized deposits, it means that I, as the bank, when I accept your tokenized deposit, I'm accepting your risk.
And that's the risk level. Am I willing to accept the risk of the deposit of the bank that I just transacted with?
Because normally those assets, or those deposits, are transferring to central bank.
And then stablecoin.
And I'll be specific: stablecoin in the context of the GENIUS Act, or payment stablecoins, are essentially private money that is backed by a certain proportion of short-term U.S. Treasuries and other assets to be compliant with U.S. Treasury.
But you're still running the risk of that private money.
So if you are transacting, you're moving millions of dollars, there is a risk of something happening to that transaction that you don't have with, at least, the central bank digital money.
I will also say that, at least in the U.S., we are in a journey to get clarity around the definition of, specifically, stablecoin, their cash equivalency from an accounting perspective.
So you, as a user, controller, using the bank, the stablecoin will feel comfortable that those stablecoins sitting on these books and records are cash equivalent.
And then, clearly, also we have the tax definition that we're waiting for clarity around that.
Kristin Myers: I'm curious to know, as you're mentioning things like compliance, and there's so much regulation that is surrounding all of this right now.
We know if we're doing a transaction between banks, right, it's going to take one, you know, they give you the little disclaimer, it's going to settle in one to three business days.
If I send money, or my brother sends me money, he lives in Europe, we get the disclaimer that it takes a little bit longer before it completely settles.
But once these things are tokenized, who decides when that transaction is settled?
Particularly if you're going across borders, because there's so many different regulations within different countries.
So what are we looking at in terms of settlement time, if we can call it that, in terms of some of these transactions, especially since these are things that are supposed to be so instant once it's tokenized?
Roy Ben-Hur: So from an end-user perspective, if you look at two to three years from now, I would probably envision that the end user will make the decision of how fast he wants the transaction to move.
There will most likely be a cost associated with it, but clearly at that point, you will still need to do the compliance requirements on both sides.
Your anti-money laundering, your Know Your Customer, Know Your Wallet requirements. That will happen in between.
But if I am a bank and I want to offer it to my client, I can say, you can move it instantly, instantaneously.
You can see it in a minute in your account in the U.S. if I'm in Europe, and it will cost you X.
And if you want to do it in 12 hours, in 24 hours, there are other options.
And there are different cost elements that are associated with it.
Kristin Myers: Looking at other risks, this is one of my favorite things to chat about either here or when we talk about, like, ETFs and other trading products.
There's going to be liquidity.
Once we move to operating 24/7, 365, does liquidity become a risk as well?
Roy Ben-Hur: If we don't solve the interoperability, as we mentioned in the report, if we don't solve the issue of developing standards and agreements across, we're really going to create liquidity pools that pretty much repeat what we have today.
Because you've got different networks and different platforms that are locking that liquidity, and they cannot operate with each other, or it takes time.
Then liquidity does become a risk.
Kristin Myers: So let's say I'm a bank, because your report has said we need to stop treating this like a science project.
So I'm Kristin. I'm the bank.
What should I be doing from now? Say I've been watching this. I'm a smaller bank. I've been watching this interview, and I'm inspired.
Now, what are my next steps over the next 12 months and beyond?
Roy Ben-Hur: I think there are a couple of items.
First, come to the reality, to the point, right? This is no more an experiment. This is live.
It is, and/or it should be, one of the offerings that you need to have with your clients.
And two, internally, build the knowledge internally about what needs to happen.
Clearly get buy-in from leadership around that and identify what are the strategies, what are the use cases that you would like to explore, depending on the type of business that that bank runs.
And then look at what's out there in the industry in terms of consortia, in terms of other bodies that will enable you to scale up and, you know, move that money internally.
Even if we just do it internally within your branches, you start small.
You don't need to go outside of it.
Just within your organization, feel comfortable with the use case and feel comfortable with the technology.
Kristin Myers: So I think I already know what you're going to say to this, but I am curious to know, what is the bigger risk for the financial institution right now?
Is it moving perhaps too early, or is it actually being too late?
Roy Ben-Hur: I think it's too late.
I think it's the risk of replacement.
The fact of the matter is, it's not too early because the early has been already done.
Right now, the market is moving.
And if you sit around, it takes time and it takes knowledge to build that muscle memory, and that's the risk that sits in front of it.
Kristin Myers: So then, to that point of the replacement, they're also risking losing part of the payments process, it sounds like, right, if they move entirely too slowly on this.
Roy Ben-Hur: It's losing their payments process. It's usually losing their clients who will potentially leverage those tools.
You can imagine, right, in January of next year, compliant stablecoins are going to be in the U.S.
A client shows up at the bank and says, "I have money in this stablecoin or that stablecoin, and I want to deposit it into my account. I want to buy my ETFs. I want to buy ETFs with it. Can you take that means of payment?"
And it's a legal tender means of payment in the U.S. on the GENIUS side.
And if that institution said, "I cannot," that client would go somewhere else.
Kristin Myers: Right.
All right. Well, thank you, Roy Ben-Hur of Deloitte.
I absolutely love that. We'll have to have you back for an update on this going forward because it sounds like it is moving very, very quickly.
