Perspective by: Hedy Wang, co-founder and CEO at Block Street
Equity markets continue to operate on outdated systems — relying on batch files, email reconciliations, and slow collateral transfers that navigate cumbersome workflows between custodians without clear control.
For the industry to uphold its credibility, this situation is untenable. The solution is not another minor fix or niche option, but rather a transition to onchain equity lending. Real-time settlements, programmable collateral, and transparent rule enforcement will set the standard that others must aspire to.
Equities rely on aspects like certainty and speed, yet the current systems hinder timely settlements, delay recalls, and complicate corporate actions with reconciliation issues.
Onchain solutions alleviate these frictions by enabling immediate and secure trade settlements, eliminating delays and risks associated with existing workflows. Smart contracts can automate routine tasks, reducing the need for tedious back-and-forth communications.
Global regulators and market creators are already laying the foundation for tokenized settlements supported by central bank funds and tokenized deposits. This represents the secure “cash” component of every transaction, ensuring financing remains safe and conclusive.
The World Economic Forum’s overview highlighted that the transition from pilot projects to actual production for issuance and securities-financing use cases is a reality as tokenization evolves from concept to reality. The time for advancement is now, as necessity continues to be the mother of invention.
Assessing the Risks
In the current equity lending environment, risks often come to light too late, revealed through exhaustive reconciliations and back-office processes, by which point issues have already escalated. Instead of reacting post-trade, rules should be applied proactively, ensuring that loans are approved only if conditions are met in advance, including limits on exposure and recall periods.
The unpredictable manual exceptions can be eliminated, while robustness in cash management can be achieved, demonstrated by a 2025 study indicating that policy execution can be maintained on programmable frameworks. If monetary operations can be safely automated, so too can equity finance regulations.
Related: Tokenized equity still navigating regulatory uncertainties
Tokenized reserves, commercial bank funds, and government bonds that are managed on platforms where settlement is conditional, atomic, and programmable were explicitly discussed in the BIS report.
The direction the market is trending aligns with a broader consensus emerging this year. Future systems will be characterized by tokenized assets and currencies overseen by public law, rather than separating crypto from fiat.
Regulation is opening the gate, not blocking the way
Critics argue that regulation acts as a roadblock, but in reality, it functions more like a metered green light. Europe’s supervised sandbox for blockchain market infrastructure illustrates this point. Live, regulated platforms operating under genuine exemptions and reporting frameworks are paving the way for future equity lending pathways.
It showcases working models, legal safeguards implemented by supervisors, and outlines where future regulations are headed. This foundational framework is precisely what equity lending needs for a smooth transition to an onchain evolution.
However, challenges remain in the industry, including fragmentation and confidentiality issues that must be addressed thoughtfully.
These concerns can be mitigated through permissioned networks managing Know Your Customer processes and whitelist constraints, along with Zero Knowledge Proofs that protect borrower and owner privacy, and standardized collateral tokens that ensure precise and auditable exposure.
Equity lending that remains locked in outdated batch processing will continue to struggle on two fronts: basis efficiency and market confidence. Delays in settlements erode returns and heighten counterparty risks, leaving participants vulnerable when precision should be paramount. In contrast, onchain equity lending not only refines the process but revolutionizes it. It ingrains transparency by design, minimizes systemic risk, and restores the intrinsic time value of capital to the millisecond.
We are no longer discussing theory. The market is pivoting in this direction. Regulatory frameworks are adapting, pilot programs are validating the model, and institutional interest is growing. The choice is becoming clear. Equity lending must transition to onchain, or risk being left behind.
Perspective by: Hedy Wang, co-founder and CEO at Block Street.
This article is intended for general information purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect the views or opinions of Cointelegraph.
