Five Reasons Why Wall Street is Obsessed with Ethereum as a Reserve Asset

Written by: Godfrey Benjamin, Thecoinrepublic

Compiled by: Jessica, Techub News

Key Points:

Ethereum is regarded as an important blockchain infrastructure that supports institutional-level decentralized finance (DeFi), asset tokenization, and stablecoins.

Large financial institutions are building tokenized assets on the Ethereum Layer 2 network.

The booming development of the stablecoin market and market catalysts are driving Wall Street to invest in Ethereum as a reserve asset.

Due to Ethereum (ETH)'s key role in blockchain infrastructure and the cryptocurrency market, Wall Street's interest in it as a reserve asset is growing.

Renowned cryptocurrency researcher Vivek Raman specifically pointed out that stablecoins and asset tokenization are important factors driving this trend.

The role of Ethereum infrastructure has attracted institutional attention.

Ethereum has become Wall Street's preferred reserve asset due to its core role in infrastructure development within the cryptocurrency ecosystem.

The authoritative figure in the crypto market, Vivek Raman, articulated this viewpoint in a widely circulated thread of tweets published on platform X.

First, he explained that Ethereum underpins most of today's decentralized finance (DeFi), while also serving as the underlying foundation for asset tokenization and stablecoins.

Raman pointed out that Wall Street has always favored infrastructure investments that stand the test of time, which is the second major reason for Ethereum's appeal today.

In the past, such infrastructure included railways and telecommunications networks. Today, Ethereum provides a digital version known as "digital oil."

Given its fundamental role, institutional investors are viewing Ethereum as a long-term strategic asset.

Ethereum's Layer 2 networks have played a crucial role in this development. For example: JPMorgan utilized the Ethereum Layer 2 network Base to develop the tokenized deposit platform Kinexys.

Robinhood achieves stock tokenization through another Ethereum Layer 2 network, Arbitrum.

Raman emphasized that institutional interest lies not only in cryptocurrencies themselves but also in the underlying platforms that drive financial innovation. Holding Ethereum is akin to holding a share of the ownership of the infrastructure that supports these services—this perspective is consistent with the traditional market's valuation logic that empowers large-scale economic activities.

Tokenization and stablecoins solidify Ethereum's position

The tokenization of real-world assets is another driving force for Wall Street's focus on Ethereum. Raman points out that financial institutions are more inclined to use blockchain for asset representation rather than engaging in speculation in the crypto markets. Ethereum provides the most active development environment for such tokenization projects.

Raman cited examples stating that giants like JPMorgan have deployed tokenization projects on the Ethereum network: "The core argument for banks favoring 'blockchain over cryptocurrency' is tokenization— and institutional-level tokenization is being realized on Ethereum. Example: JPMorgan is working on deposit tokenization on the Ethereum Layer 2 network Base. Want to have the infrastructure? Hold ETH."

Image Source: Vivek Raman on X

These practices have made Ethereum a natural choice for more institutions exploring similar strategies.

Stablecoins are the third major reason Wall Street is betting on Ethereum. Data from the crypto market shows that the total market capitalization of stablecoins is close to $250 billion and may exceed $2 trillion in the future, with the vast majority issued on the Ethereum network. Companies like Circle, which issues the USDC stablecoin, have already received equity investments from traditional financial institutions. Raman's analysis suggests that Ethereum may become the next destination for these institutions' crypto asset allocation.

Analyst Tom Lee suggested that banks may start purchasing Ethereum to ensure the stability of their stablecoin business.

Market Catalysts and Value Re-evaluation Potential

Raman also listed market catalysts that drive the growth of Ethereum investment, such as:

Companies like SharpLink Gaming and BitMine Immersion Technologies continue to attract new capital inflows related to ETH assets.

These companies are backed by heavyweight figures such as Joseph Lubin (co-founder of Ethereum) and Tom Lee.

Wall Street has always been sensitive to positive price catalysts and emerging narratives. The deep connection between Ethereum and the development of stablecoins, as well as the construction of financial infrastructure, continues to attract such attention.

Finally, Raman specifically mentioned Ethereum's potential to become the "next Bitcoin." Many investors missed the early surge opportunities of Bitcoin, and Ethereum's sideways movement over the past five years resembles certain market patterns before breakthrough rallies. The tweet pointed out that if Ethereum's use cases continue to expand, its valuation system may be restructured—its leading position in tokenization, stablecoins, and DeFi will be key driving factors.

Regardless, Wall Street's current interest in Ethereum reflects a long-term strategic layout. Raman's analysis lists infrastructure value, tokenization practices, and market momentum as core reasons. As blockchain finance evolves, Ethereum's role seems to be continuously expanding.