Will the US-China trade war trigger an "institutional shift" in financial markets? ECB warns: Investors are reassessing the risks of U.S. assets

Here is the English translation: The global financial markets are facing a potential "institutional change" that could overturn the current landscape? The European Central Bank (ECB) in its latest Financial Stability Review points out that due to US trade policies and tariffs, investors seem to be rethinking the risk levels of US assets, which could have far-reaching implications for global capital flows and financial stability. The ECB noted that after the US implemented a series of tariff policies, market volatility significantly increased. Stock markets sharply declined after President Trump announced broad tariffs, and then rebounded after he announced a 90-day postponement of some tariffs. The report mentioned: "During this turbulent period, the trading functions of the Eurozone financial markets remained stable, although there were some unusual capital flows, including funds moving out of traditional safe-haven assets like US Treasury bonds and the US dollar." The ECB stated that this capital adjustment might not just be a short-term technical factor, but could also represent investors' awareness of an "institutional transformation" in the entire market landscape. The central bank pointed out that this wave of changes might indicate that investors are "re-evaluating the risk of US assets". If this trend continues, it could lead to a structural adjustment of global capital flows, further affecting the stability of the global financial system. ECB Vice President Luis de Guindos warned in a CNBC interview that the market is currently too complacent about risks and still has a "correction" risk in the future. He stated: "The market is currently very optimistic, believing that economic growth will slow but not recession, inflation will decline, and monetary policy will ease. But these expectations might be too ideal." The ECB Vice President highlighted that the two main sources of market volatility are "high valuation" and "policy uncertainty". The ECB had previously warned about "valuations not supported by fundamentals", and now some of these risks have partially materialized. He directly stated: "Trump's tariff policies are the trigger for this turbulence." From a broader perspective, de Guindos emphasized that the uncertainty in US trade, fiscal, and regulatory policies has become a key factor affecting global financial markets. He noted that such an environment not only makes investors more cautious but could also pose a threat to European financial stability. Regarding inflation and economic growth, de Guindos warned that while trade tariffs might push up import prices in the short term, they could also suppress consumer demand, potentially offsetting price increases. However, in the long term, if tariffs and trade friction lead to global supply chain disruptions, corporate costs will rise, potentially triggering more persistent inflationary pressures. Meanwhile, the EU's updated economic forecast is also not optimistic. The 2025 EU GDP estimate was revised down from 1.5% to 1.1%, and the Eurozone from 1.3% to 0.9%. Inflation is expected to fall below the ECB's 2% target in 2026, indicating a simultaneous slowdown in growth momentum and price pressures. US online broker Robinhood submitted a regulatory proposal for Real World Asset (RWA) tokenization to the SEC on 5/20 Eastern Time, while also revealing the future blueprint for a Real-world Asset Exchange (RRE), attempting to improve the efficiency of the existing financial system and address state regulatory fragmentation, enabling tokenized assets to be compliant.

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Please Confirm RWA as an Asset, Not a Derivative

In Robinhood's proposal, there is a special key point:

"Hope that the SEC will treat RWA as the asset itself, for example, a Token representing US Treasury bonds should be legally equivalent to the bond itself, rather than similar to an ETF or derivative."

This approach would make it easier for brokers and institutional investors to tokenize traditional assets, avoiding many additional regulatory and tax issues, and allowing tokenized assets to smoothly enter the mainstream financial system.

RRE Adopts Solana and Base as Dual-Chain Structure, Targeting Same-Day Settlement

The Real World Asset Exchange (RRE) planned by Robinhood will adopt a "dual-chain architecture" using Solana and Base chains as the technical foundation.

According to the technical overview, RRE will process transactions using "off-chain matching + on-chain settlement", which can lower transaction costs, solve latency issues, and maintain the transparency and traceability of blockchain. Here are the technical details:

• Matching process takes less than 0.00001 seconds

• Can process up to 30,000 transactions per second (TPS)

• Clearing compressed from traditional T+2 to T+0, enabling same-day settlement

• Estimated to save about 30% in transaction costs annually

KYC, Anti-Money Laundering Systems Fully Equipped, Strengthening Compliance with Jumio and Chainalysis

Robinhood also stated that RRE will collaborate with companies like Jumio and Chainalysis to ensure user data verification (KYC) and anti-money laundering (AML) monitoring mechanisms are comprehensive, creating a fully compliant trading environment.

Additionally, they suggest that the SEC promote a unified national regulatory standard, replacing the current state-by-state approach, to address the fragmentation of RWA market regulation.

BlackRock, Telegram, UAE Real Estate Also Joining In

Currently, the entire financial and crypto market is promoting RWA-related applications:

• BlackRock: On 4/30, submitted a proposal to the SEC to establish an on-chain version of its $150 billion US Treasury bond fund for easy tracking of holdings.
• Tokenization Project Libre: On 4/30, collaborated with TON to launch a Telegram bond fund, planning to tokenize $500 million of Telegram's corporate bonds.
• UAE Real Estate Company MAG and Blockchain Firm Mavryk Collaboration: Signed a $3 billion asset tokenization agreement.

Blockchain Settlement Era Arrives, Brokers May Be Eliminated If Not Transformed

In summary, Robinhood's innovative proposal could potentially disrupt traditional settlement models. If the SEC ultimately agrees, in the future, trading US Treasuries, real estate, and other real-world assets via blockchain could be possible in the United States.

However, traditional brokers may face the following challenges:

• Forced to upgrade their systems

• If brokers' product design capabilities, user experience, and custody services cannot interface with on-chain asset structures, they may be eliminated.

(Robinhood Enters European Market, Plans to Launch Blockchain Platform for US Stock Tokenization)