TradFi Bridge

Definition ∞ A TradFi bridge is a mechanism facilitating the connection and transfer of value between traditional finance and the digital asset ecosystem. These systems allow for the movement of capital, data, or services between established financial institutions and decentralized applications or blockchain networks. They often involve regulatory compliant entities that convert fiat currency into stablecoins or tokenized assets, or vice versa. The purpose is to reduce friction and increase interoperability, thereby expanding the reach and utility of digital assets.
Context ∞ The current state of TradFi bridges involves increasing institutional interest in tokenized assets and regulated stablecoins. A key debate centers on establishing robust, compliant frameworks that address anti-money laundering and know-your-customer requirements. Critical future developments include the widespread adoption of central bank digital currencies and the creation of more secure, standardized protocols for cross-system asset transfers. These bridges are essential for mainstream crypto adoption.