Last week during EthCC in Cannes, France, Chainlink co-founder Sergey Nazarov delivered a keynote on why institutional capital is vital to the blockchain industry’s future growth. He was joined on stage by Alexandre Kech, CEO of GLEIF (the Global Legal Entity Identifier Foundation), to further explore how Chainlink’s Automated Compliance Engine (ACE) paves the way for more than $100 trillion in institutional capital to flow onchain.
Launched in collaboration with leading market participants including GLEIF, Apex Group, and the ERC-3643 Association, ACE is a unified standard for creating compliance-focused digital assets and services across public and private blockchains. Its modular, privacy-preserving framework integrates existing identity systems with onchain infrastructure to support policy enforcement.
Nazarov believes real-world asset tokenization will ultimately drive onchain finance’s mainstream adoption.
“That’s just based on the fundamental math of where all the money is: inside of institutions, pension funds, family offices, sovereign wealth funds, and their related asset managers and banking partners,” he said.
Having already enabled over $22 trillion in transaction value, Chainlink provides essential tokenization infrastructure that’s bridging the gap between traditional and onchain finance.
Last year, SBI Digital Markets and UBS Asset Management successfully demonstrated how Chainlink’s Cross-Chain Interoperability Protocol (CCIP) can streamline tokenized fund operations across different blockchains and financial systems.
A recent report from Visa highlights how CCIP enables the simulated secure exchange of ANZ Bank’s A$DC stablecoin with Hong Kong’s e-HKD CBDC to purchase Fidelity International’s simulated tokenized fund in a compliant cross-border transaction.
“The globalized nature of our industry is what makes it very powerful,” Nazarov said.
“That’s a very fundamental advantage – that when you launch a high-quality financial product onchain, you are accessing a global market and a global pool of liquidity. Whereas when you launch something in the TradFi world, you’re usually accessing only a very local market.”
A critical component of achieving compatibility with existing identity standards is Chainlink’s Cross-Chain Identity (CCID) framework.
“CCID is able to take in offchain credentials and put them onchain in a portable cross-chain identity that can be appended to tokens, transactions, assets, and allow them to be frictionlessly moved and transacted against,” Nazarov explained.
He called cross-chain identity verification using existing standards such as KYC, AML, and accredited investor status “the final building block” in bringing vast amounts of institutional capital onchain.
“The volume and size of that capital will be such a huge advantage to those that get it that everybody that wants to remain competitive will have to get it. And to get it, you will have to meet certain requirements.”
GLEIF oversees use of the globally recognized LEI (Legal Entity Identifier) which enables clear and unique identification of legal entities in the traditional financial system. The vLEI (verifiable Legal Entity Identifier), an advanced version of LEI designed for the digital world, integrates with Chainlink’s ACE to enhance compliance across blockchain ecosystems.
“Regulated financial institutions cannot act without knowing who they’re dealing with and what they’re dealing with,” said Kech. He explained how ACE solves the critical problem of verifiable onchain identity for entities concerned with compliance.
“One way of doing that is ensuring that the identity system they already know and use in traditional finance can be reused on blockchain and on infrastructures like the ones that these guys are building with you and with other partners,” he told Nazarov.
Nazarov highlighted ACE’s integration with vLEI as proof that onchain and offchain standards can be made compatible.
“If CCID is built properly and integrated into the right systems, then we can actually make compliance a feature of our industry,” he said.
Watch the full presentation.