As more and more traditional institutions begin to dabble in digital assets, some believe the best way for both old-school finance and decentralized finance (DeFi) to grow together is through a cross-chain world and tokenization.

At Chainlink’s SmartCon 2022 conference, the “Bridging Traditional Finance and DeFi” panel discussed how interoperability could drive greater success for crypto in traditional markets. (Blockchain interoperability is when different chains communicate with each other. Tokenization is turning assets into digital tokens so investors could own fractional bits of the underlying asset.)

“By default, I’m definitely bullish on tokenization,” Victor O’Laughlen, managing director of head of enterprise tokenization at BNY Mellon, said. “We’re actually looking at tokenizing all different types of assets internally and, really, tokenization for me is an enabler for interoperability.”

Historically, financial institutions haven’t connected well, O’Laughlen said. “We have our own islands and try to operate in the best way that we can, but there’s always fear and uncertainty if we connect … but there’s a lot of integration that needs to happen within banks.”