Ethereum Is Ready to Replace Wall Street’s Settlement Backbone—and Investors Are Underestimating Its Power
Wall Street's post-trade world remains shackled by slow, opaque settlements. Today’s processes often stretch for days, expose participants to counterparty risk, and compel overnight financing with collateral while intermediaries extract rents from the inefficiencies. On Sept. 15, in a Milk Road podcast, SharpLink CEO Joseph Chalom—formerly BlackRock’s head of digital asset initiatives—described the friction at the heart of traditional finance and contrasted it with Ethereum’s promise of atomic settlement that can clear trades in seconds with virtually no counterparty risk. He argued Ethereum is building a new kind of public infrastructure—almost like Web1, but for a 21st‑century digital economy—and could become the universal settlement layer for financial and economic systems. Moreover, Ethereum’s programmable nature enables portfolio rebalancing through smart contracts, dividend distributions in minutes (not days), and composable transactions that let any asset trade against any other asset at any time. Taken together, these capabilities create what Chalom calls “the license to win” for institutions seeking real efficiency. The July 2024 launch of Ethereum ETFs marked an adoption inflection point, with treasury companies now holding about $14–15 billion in ETH.
In This Article:
The Friction of Legacy Finance: Why Settlements Are So Inefficient
The present financial infrastructure is difficult to access and clogged with friction, with intermediaries extracting rents from inefficiencies. These issues show up in day-long settlements, persistent counterparty risk, and burdensome collateral requirements for overnight funding. Chalom argues that removing these frictions would unlock vast pools of capital and dramatically reshape how markets move. Ethereum’s architecture promises a very different paradigm: settlements that happen in seconds, with far less counterparty exposure, enabled by a programmable, trust-minimized ledger.
Ethereum as a Universal Settlement Layer: Atomic Settlements and Programmable Power
Ethereum’s atomic settlement can execute trades in seconds and eliminates counterparty risk. Its programmable nature enables portfolio rebalancing through smart contracts, dividend distributions in minutes, and composable transactions that let any asset trade against any other asset at any time. These capabilities form what Chalom calls “the license to win” for institutions seeking efficiency in a complex market. He also frames Ethereum as a new kind of public infrastructure, akin to Web1 in the era of a connected internet, but built for today’s financial ecosystem.
Verifiable Trust Beyond Finance: Crypto-Verified Society
Sreeram (Sreeram) Kannan describes Ethereum as “the platform for verifiable trust” that reduces counterparty risk through cryptographic verification rather than relying on institutional guarantees. EigenLayer enables Ethereum to power additional networks beyond the base protocol. He emphasizes: “Verifiability is the substrate of society itself.” Applications include AI agent verification, prediction markets like Polymarket, and autonomous systems that require trust without human oversight.
Education to Adoption: The Road Ahead for Institutions
Both executives note an ongoing education-to-adoption transition among institutional investors. Chalom says Bitcoin required an explanation of digital gold, while Ethereum demands deeper infrastructure storytelling that takes longer but builds stronger conviction. The July 2024 Ethereum ETF launch created an adoption inflection point, with treasury entities accumulating approximately $14–15 billion in ETH. Chalom predicts acceleration beyond Bitcoin accumulation pace as institutions recognize Ethereum’s productive asset characteristics through staking and DeFi yields. Overall, the trajectory suggests institutions will increasingly look to Ethereum as a foundational settlement layer that could reshape Wall Street’s infrastructure.
