The Next Five Years Will Not Be Dominated by a Single Sector: Exilist Analyzes the Rise of On-Chain Finance Combining Stablecoins, RWA, and AI

In the next five years, the leadership of the crypto market is expected to emerge not from a single sector but from an 'on-chain financial system' that combines stablecoins, real-world assets (RWA), artificial intelligence (AI), privacy, and regulatory infrastructure. According to research from Exilist, during WebX 2026, one of Japan's largest blockchain events, there were differing views on promising sectors, but there was a clear consensus that for the Japanese market to accommodate institutional funds, a clear regulatory framework, custody, payment and settlement systems, and stablecoin-based infrastructure must first be established.

This analysis is based on interviews conducted with key industry figures such as Startale Group, BitGo, bitFlyer, and SBI VC Trade at WebX 2026 held in July 2026 in Japan. When asked about which crypto sector would grow the most in the next five years, each participant provided different answers. However, despite the variations in responses, the market's endpoint was similar. The structure combines cash and financial products, trading and collateral, regulation, and operational automation within a single on-chain environment.

Abel, who oversees BitGo's Asia operations, identified tokenized stocks and stablecoins as key growth pillars. He noted that stablecoins are no longer just a means of internal exchange payment but are beginning to be understood as assets that solve real-world problems. This suggests that stablecoins could expand into traditional financial areas such as payments, settlements, corporate treasury management, and remittances.

Mengqi, responsible for institutional clients at bitFlyer, focused on RWA and AI. Given that traditional stock markets are bound by fixed trading hours, RWA can potentially break free from the limitations of trading hours and accessibility. Tatsu, in charge of business development at Startale Group, highlighted prediction markets and privacy as promising fields, while Mio Yonenaga from SBI VC Trade believed that 'regulation' and 'compliance' would ultimately determine market growth more than specific asset classes.

While superficially, more than five keywords such as stablecoins, RWA, AI, privacy, and prediction markets were presented in parallel, Exilist interpreted them not as separate trends but as components that make up a single financial system. Stablecoins provide on-chain cash, RWA and tokenized stocks increase the asset pool for trading, and DeFi and derivatives markets connect these with collateral and liquidity. AI automates operations and risk management, while privacy and compliance provide the institutional conditions necessary for investor participation.

At WebX 2026, the area that had progressed most concretely in terms of commercialization was stablecoins. In particular, in Japan, yen-based stablecoins are being tested simultaneously for both public payments and inter-company settlements. On July 13, the day of the WebX event, SBI VC Trade announced a lending service utilizing the trust-based yen stablecoin JPYSC, with applications starting from the 16th. The company holds a license for electronic payment transaction services that allows it to provide distribution and trading services for stablecoins to general customers in Japan.

Yonenaga noted that Japanese consumers are accustomed to point payment systems and transportation IC cards. Considering these lifestyle habits, stablecoins could become the first on-chain service that successfully integrates into real use without prominently displaying blockchain technology. Users should be able to use it as naturally as existing easy payment systems without having to learn complex concepts like wallet addresses or gas fees for widespread adoption.

The JPYSC, co-developed by Startale and SBI, is not limited to simple issuance. Initial use cases include cross-border remittances and peer-to-peer foreign exchange settlements (P2P FX Settlement). This strategy seems to focus more on building payment rails that connect the Japanese financial market with the overseas on-chain market rather than competing for market capitalization with dollar-based stablecoins like Tether (USDT) and Circle's USD Coin (USDC). The yen stablecoin has a high potential to become a practical asset connecting fund flows in Asia, accounting and settlements for Japanese companies, and on-chain payments for Japanese financial products.

In this context, the importance of custody, trading, third-party collateral management, and issuance infrastructure emphasized by BitGo also comes to the forefront. For institutional investors to use stablecoins, it is not enough for tokens to simply exist. A comprehensive infrastructure connected to asset management, redemption structures, anti-money laundering procedures, and counterparty risk management is necessary. Ultimately, the competitiveness of stablecoins is likely to be determined more by who issues and holds them and which financial institutions participate in actual settlements than by market capitalization.

The second pillar of on-chain finance is RWA and tokenized stocks. While there is still a strong perception centered on real estate and REITs in Japan, tokenized stocks are rapidly gaining prominence in the global market. As of July 21, 2026, according to RWA.xyz, the distributed issuance value of tokenized stocks is approximately $1.86 billion, with a monthly transfer amount of about $8 billion and around 670,000 holders. Ondo has emerged as a leading platform supplying tokenized stocks worth about $850 million.

In absolute terms, it is still difficult to compare with the traditional stock market. However, the growth rate and structural advantages are clear. Tokenized stocks allow access to specific stock prices without local securities accounts and provide trading opportunities outside regular hours. However, the key point is not 24-hour trading itself but liquidity and collateral efficiency.

Ian De Bode, CEO of Ondo Finance, found the intrinsic value of tokenized stocks in 'capital efficiency' rather than 'additional trading time' during a WebX session. In the existing on-chain perpetual futures market, stablecoins serve as the main collateral. For instance, even if a market maker buys actual Tesla stocks in an off-chain securities account to hedge, the on-chain platform cannot verify this and still requires more collateral. This means that the actual capital efficiency of large funds and market makers can drop to around 30-50%.

Conversely, if tokenized Tesla stocks can be used directly as collateral within the platform, the situation changes. The platform can simultaneously verify short positions and the corresponding physical assets, allowing market makers to provide liquidity with less additional collateral. This indicates that tokenized stocks can evolve from simple trading assets to collateral for loans, margin for derivatives, and tools for portfolio management. This is where 'combinability' arises.

The layer 1 blockchain Strium, co-developed by Startale and SBI, also targets this trend. Strium aims to provide 24-hour spot and derivative trading and settlement for financial products linked to tokenized stocks and RWA. It is also significant that it plans to support JPYSC as a native asset. This is interpreted as an attempt to place yen stablecoins and tokenized financial products from Asia and the US within a single trading environment.

AI was another focus at the event. However, its role was closer to changing the operational methods and trading processes of existing financial companies rather than creating new token narratives. Mengqi explained that AI is already widely used for repetitive tasks such as internal document creation and data organization. This change can have particularly direct effects on Japanese financial companies, which face high regulatory response costs for customer due diligence, report writing, anomaly detection, and data organization.

Furthermore, the second phase of AI is asset management automation. For AI agents to analyze market data, adjust portfolio weights, and manage positions according to changes in collateral value, assets must be in a form that machines can read and move. In this regard, stablecoins, tokenized assets, and on-chain trading markets naturally combine with AI-based finance. Tokenization makes financial assets programmable, and AI operates those assets faster than humans.

Of course, AI does not replace all authority. Operational limits, approval systems, trading suspension rules, accountability, and verifiable execution records must be designed together. The argument that AI is not a technology that undermines regulation but rather one that demands a more sophisticated control system is gaining traction.

As institutional funds flow in, the importance of privacy also increases. Public blockchains are transparent in that all transactions are public, but for companies and financial institutions, the structure where trading partners, timing of fund transfers, payment amounts, and held assets are exposed to the outside can be burdensome. This is especially true for financial institutions that have a duty to protect customer information.

Therefore, in on-chain finance for institutions, 'selective disclosure' is likely to be key rather than completely anonymizing all transactions. This means that approved trading parties and regulatory bodies can verify within necessary limits while hiding transaction details from unnecessary external parties. Datachain, which participated in WebX, introduced the on-chain privacy infrastructure KuraPrivacy along with enterprise Web3 wallets, suggesting that policies, markets, and technologies are needed simultaneously for the social implementation of stablecoins and tokenized deposits.

Interest in prediction markets has also been notable. While the scalability is currently limited due to the boundaries of gambling and financial product regulations in Japan, from a global perspective, the ability to reflect political, economic, and social events in real-time prices is highly valued. This aligns with on-chain stocks like Perps, which provide price signals even on weekends. Information continues to emerge even when traditional financial markets are closed, and on-chain markets can reflect this information in prices first.

Ultimately, the most important variable in the Japanese market is regulation rather than individual promising sectors. The background of WebX 2026 is the Japanese government's institutional reforms. At the opening of the event, Prime Minister Sanae Takaiichi mentioned the progress of social implementation of Web3, and many officials responsible for finance, economy, industry, and digital policy participated. This scene can be interpreted as the Japanese government beginning to treat crypto assets not merely as experimental subjects but within the existing financial and industrial policy framework.

On July 15, the day after the event, the Japanese House of Councillors passed an amendment to include crypto assets under the regulation of the Financial Instruments and Exchange Act. The bill shifts crypto assets from a payment-centric existing framework to a regulatory framework closer to investment products, including provisions for disclosures, insider trading regulations, and stricter penalties for unregistered operations. A foundation has also been laid for the tax system to move from a comprehensive tax rate of about 55% to a separate taxation level of around 20%. However, the actual reduction in tax rates is expected to be discussed for implementation in 2028.

Yonenaga assessed that this change could enhance market liquidity and create an environment where investors can trade more freely. While stricter regulations increase the cost burden on operators, they clarify the entry standards for institutions. It is difficult to inject large amounts of capital into a market where asset classification, custody methods, tax treatment, and loss accounting are unclear.

Abel also reported that proof of concept (POC) projects between crypto companies and traditional financial firms are actively progressing in Japan. This indicates that commercialization has not yet fully progressed, but it also reveals that internal budgets and organizations within companies are already in motion. Although the adoption of Japanese-style institutions may be slow, once adopted, there is a high possibility of scaling through existing financial networks.

It is also noteworthy that companies are focusing on building institutional infrastructure rather than reducing their business even in a bearish market. bitFlyer Holdings announced its prime brokerage service 'bitFlyer Prime' for institutional investors and companies, planning to provide over-the-counter (OTC) trading, custody, and management support with a target launch in 2027. BitGo is also expanding its scope beyond wallets and custody to include trading, staking, third-party collateral management, stablecoin issuance, and DeFi access services.

This is because if institutional funds materialize, the market cannot operate solely through one exchange. Custody, market-making, over-the-counter trading desks, collateral, and liquidation systems must coexist for large funds to settle. While these areas may receive relatively less attention in a bullish market, they are crucial in determining the market's capacity as they represent the 'invisible infrastructure.'

The Japanese market has long been regarded as slow and conservative. The limited number of assets available for listing, high tax rates, and strict regulations have indeed caused global projects to hesitate in entering Japan. However, the same regulations are beginning to function differently now. They are drawing crypto assets into financial product regulations, adjusting the tax system closer to traditional finance, and banks and exchanges are building stablecoin and custody infrastructures. This indicates that Japan has chosen to institutionalize crypto within the existing financial system rather than nurturing it outside of regulation.

Mengqi noted that while the Japanese market may be perceived as slow, once a decision to push forward is made, it will ultimately be executed. In fact, at this WebX 2026 event, there were more projects in the construction phase than completed products. There are yen stablecoins that are difficult to move freely on public chains and institutional services that will take time to commercialize. Nevertheless, the fact that business organizations are being formed, licensed companies are launching products, and POCs between financial companies and crypto firms are increasing indicates that the Japanese market is moving from the review stage to the execution stage.

The analysis from Exilist emphasizes that the winners of the next five years are unlikely to emerge from a single token or single theme. While stablecoins are strong in payments and settlements, their ability to supply investment products is limited, and tokenized stocks provide assets but require stable payment methods and liquidity. AI can automate operations, but reliable data and regulatory control must accompany it, and privacy creates conditions for institutional participation while also ensuring verifiability. In other words, stablecoins, RWA, AI, privacy, and regulation are in a competitive relationship while being mutually dependent.

Thus, the key competition in the future market is likely to hinge on who can seize the connection points rather than individual coins. This means that the operator who dominates the intersections of payments and custody, collateral and trading, regulation and certification is likely to have a recurring revenue structure. Japan may not be the first market to create a new narrative. However, its ability to leverage regulation, the financial sector, and large corporate distribution networks to anchor technology within existing institutions is evident. What WebX 2026 demonstrated was not just Japan's speed but its 'direction.' What needs to be confirmed in the next bullish market is not what trends have emerged, but how many financial institutions have actually started services and how much capital and liquidity have moved onto that infrastructure.

Disclaimer: This content is provided for general branding and informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online events, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets or to use any services. Crypto assets are highly volatile and may result in loss. WEEX services and online events may not be available in all regions and are subject to applicable laws, regulations, and eligibility requirements. You are responsible for ensuring that your use of WEEX services complies with local laws and for carefully assessing the risks before participating in any crypto-related activities.