The post The capital migration that could reshape finance appeared on BitcoinEthereumNews.com.

The following is a guest post and opinion from Patrick Heusser, Head of Lending & TradFi at Sentora. Capital is undergoing a structural reallocation. What once sat securely in fractional-reserve bank accounts is now increasingly flowing into fully funded, blockchain-based financial systems. From stablecoins like USDC and USDT to tokenized T-bills, institutional and retail capital is chasing programmability, global interoperability, and perceived safety. This is not a simple migration of money; it is a replatforming of financial infrastructure. In this deep dive, we examine the risks, mechanics, and strategic responses to this shift—and ask whether a hybrid system can emerge before systemic cracks appear. Two Worlds, One Capital Base The Fractional-Reserve Fiat Model In traditional banking, commercial banks operate on fractional reserves. Deposits are only partially backed, and banks create money through lending. This model offers high capital efficiency and elasticity; banks can support economic growth by expanding credit, but at the cost of fragility, maturity mismatches, and systemic dependency on central banks. Payment rails (ACH, SEPA, card networks) rely on netting, credit lines, and settlement-finality delays. Liquidity is managed across a network of intermediaries and backstops. The Fully Funded Blockchain Model In contrast, stablecoins operate on a one-to-one reserve basis. Transactions settle instantly, transparently, and are irreversible. However, they require pre-funding and, by design, eliminate endogenous credit creation. Liquidity must be fully available before transactions occur. This rigidity offers trust minimization and atomicity, but also introduces capital intensity and an operational burden when interfacing with TradFi. The concept of “singleness of money” is challenged by this divide: stablecoins cannot seamlessly substitute for fractional bank deposits unless deep interoperability and synchronized settlement are established. The Capital Shift: From Bank Deposits to Stablecoins A growing share of global liquidity is migrating into stablecoins. This movement represents more than technological preference—it is…

---

Filed under: News - @ July 8, 2025 7:29 pm