Today, the Federal Reserve hosted a payments innovation conference where leading industry experts convened to exchange insights on the evolving U.S. money and payments landscape.
Chainlink co-founder Sergey Nazarov joined Jackie Reses, CEO of Lead Bank; Michael Shaulov, CEO of Fireblocks; and Jennifer Barker, BNY’s Global Head of Treasury Services and Depositary Receipts, for a panel discussion on bridging traditional finance with the digital asset ecosystem, moderated by Jito Labs’ Rebecca Rettig.
As the standard for onchain finance, Chainlink powers approximately 70% of decentralized finance (DeFi) globally and supports a growing spectrum of tokenized real-world asset (RWA) and stablecoin issuers, including leading DeFi protocols and some of the world’s largest financial institutions.
Chainlink is the largest provider of Proof of Reserve, which prevents incorrect minting and overminting of stablecoins, as well as bridging technology for capital markets to transition towards digital assets via Cross-Chain Interoperability Protocol (CCIP).
Nazarov emphasized the compatibility of Chainlink’s web3 services with legacy financial systems. He described smart contracts powered by Chainlink oracles as the path toward regulated DeFi, where compliance is automated and risk is transparent. This is especially important for tokenized deposits, stablecoins, and RWAs that rely on a single data source.
For example, tokenized asset issuers can embed cryptographic guarantees directly into their assets using Proof of Reserve’s Secure Mint capability, which programmatically enforces 1:1 collateralization by ensuring new tokens are only minted when they are backed by sufficient reserves.
“Secure mint stops cases of overminting completely; it becomes impossible because the contract itself is responsible for checking whether or not the reserves exist,” Nazarov explained. “It’s not a people-driven process anymore; it’s a smart contract-driven check.”
Transparency is also key.
“There’s a way to create transparency for the market so the market knows this tokenized deposit is guaranteed by this bank or this custodian, in this class of account, with this data source being the only data source. We already provide that information about our Proof of Reserve for stablecoins. And then the market can make their own risk decisions.”
When asked how he would recommend the Fed prepare for the payments landscape to converge with DeFi, Nazarov advised making existing infrastructure compatible with digital assets payments alongside directions for navigating risk.
“I would look to create clear guidance that manages risk appropriately to make sure that the stablecoins and tokenized deposits on the payments side of the digital asset economy can grow successfully and can grow successfully out of the United States more than anywhere else,” he said.