BIS: RWA tokenization strengthens connection between crypto and traditional finance

In a recent paper, the Bank for International Settlements (BIS) noted that real-world asset (RWA) tokenization will strengthen the connection between crypto and traditional finance (TradFi), according to The Daily Hodl. According to the paper, if this trend continues, more assets will be traded in the decentralized finance (DeFi) ecosystem, potentially fueling DeFi infrastructure to be much more popular. However, the BIS also cautioned that the evolution of the DeFi ecosystem could bring some systemic risks. It is also necessary to analyze the role of stablecoins in supporting DeFi growth and the risks generated by their instability, as well as their spillover effects with TradFi, BIS added.