Why Banks Are Writing Smart Contracts This Year

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After years of hedging their bets, emerging crypto-friendly regulation has spurred banks to build financial rails onchain this year, according to Scott Dykstra, the CTO and co-founder of Space and Time, which helps connect offchain and onchain databases. There may not have been many public announcements about this yet, but the wheels seem to be in motion across the industry. 

“Almost every single bank we talked to is writing a smart contract this year,” Dykstra said on Token Relations’ Talking Tokens podcast recently. Lenders have been hiring consulting firms to write smart contracts to do everything from bringing money market funds onchain and collateralized debt obligations (CDOs) to programmatic finance, he said. 

Banks are also sourcing new liquidity for portfolios that comprise money market portfolios and other kinds of programmatic finance products.

It’s early days, though, and banks are experimenting with setting up initiatives like digital innovation groups, Dykstra noted. Through such initiatives, banks can improve in areas like CDOs, for example: Dykstra explained that Space and Time can analyze a bank’s existing data and feed it into smart contracts to automate cash allocation and distribution to investors. 

This can be done with onchain connected databases. Space and Time provides the input data for smart contracts, and is best known as a “data blockchain” that connects offchain and onchain data to support workloads such as DeFi protocols, stablecoins, tokenized assets and institutional use cases like the ones mentioned above. 

“We're wiggling our way into the conversation with every bank we can,” Dykstra joked. “Like, ‘Hey, I bet you're writing a smart contract this year, need some help?’”

Space and Time is seeing its sales cycle speed up as a result of this growing demand. “It's like a few months of prep and then they want to write a contract,” Dykstra said, comparing the situation to previous years when companies like his would spend a whole year to close a deal.

In practice, Dykstra believes the future of the financial system will feature 24/7 markets, entire financial products traded onchain through smart contract codes, and  the ability to source liquidity from around the world. 

Dykstra pointed out a key reason for finance to move onchain: Blockchain tech could replace old transactional databases with new ones. 

“That's worked great for 30 years [because] before that it was only mainframes,” Dykstra said. “Now it's mainframes plus databases.”

Databases are more complex today than ever, especially because they handle a massive amount of volume and secure transactions in real time, across a number of technical formats. These systems today handle about 90% of credit card transactions and over half of production workflows. 

But as technology improves, founders like Dykstra see the opportunity to modernize these efforts.

“Blockchains are just another transactional database, but they’re watched by a bunch of validators and servers across the globe that are all together watching those transactions and ensuring that the ledger of your Bank of America bank account hasn't been tampered,” Dykstra said. 

In the near term, a mass of off-chain portfolio data needs to come onchain through smart contracts. “That's a huge opportunity for us. We've been building zero-knowledge proof technology to make that more secure for six years now.”

Check out the next section for more details and the full episode.

For today’s episode, I interviewed Scott Dykstra, co-founder and CTO of Space and Time, about how the crypto market has evolved from the 2021 NFT craze to the 2026 institutional era. Scott explains why almost every bank is now writing smart contracts, how Space and Time helps financial institutions connect offchain data to onchain markets, and why blockchains are fundamentally better transactional databases than traditional systems like Oracle.

He walks through the shift from early crypto startups to mature DeFi protocols to enterprise clients, how banks are building pilots for stablecoins and tokenizing real-world assets, and why the Wells Fargo data manipulation case proves the need for verifiable compute. The conversation covers Space and Time's Proof of SQL technology, how the company enables stablecoin yields institutions' need for offchain data, and why AI agents buying their own services with stablecoins may be the next frontier for crypto adoption.

TIMESTAMPS 

00:00 – Intro

00:54 – Crypto as a fundamental technology that disrupts in whirlwinds

01:49 – From 2021 NFT craze to 2026 institutional era: suits replacing mohawks

03:01 – Why almost every bank is writing smart contracts in 2026

05:34 – How Space and Time provides data inputs for banks' onchain pilots

07:50 – Everyone wants to mint their own stablecoin due to: FOMO and ease of implementation

09:40 – Why all finance will move onchain with: blockchains as better transactional databases

13:52 – Fintechs like Stripe and Circle bringing banks onchain

18:32 – Space and Time's evolution from 2022 startups to 2026 institutions and DeFi

24:09 – Decentralized stablecoin yields amid regulatory uncertainty

30:14 – AI agents transacting with stablecoins as crypto's next frontier

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