Fintech, financial services and blockchain will be “inseparable” and “indistinguishable,” according to Kraken Ventures partner Akshi Federici, laying out a vision of the future during during her talk at the Ethereum Community Conference or EthCC in Paris last week.

Why it matters: All major aspects of financial services could use the blockchain, including capital markets, asset management, payments, retail and institutional banking and insurance, she said.

That, plus continued investment from Wall Street firms are rallying points for the crypto industry, Federici said.

What’s happening: “Roughly eight or nine of the 50 top innovative companies in fintech for two years consistently has been crypto/blockchain-first companies,” she said, referencing Forbes rankings.

The 2022 ranking includes Chainalysis, Circle and FTX alongside fintech darlings Carta and Stripe.

“Obviously we have to adjust for the market recently, but extremely encouraging from a VC perspective to see this,” she said.

The big picture: “There is obviously a lot of frustration from a regulatory perspective in the United States, and there’s this view that a lot of innovation in crypto, fintech, blockchain etcetera is going to come from— external to the United States,” she said, while acknowledging that previous investments from bulge-bracket firms were “encouraging.”

Traditional Wall Street firms are invested.                         

“There are more traditional financial institutions than ever that are betting on the blockchain,” Federici said, adding they’re pretty much “table stakes.”

Morgan Stanley, Goldman Sachs, BNY Mellon, Commonwealth Bank and Citi have invested in a variety of companies including NYDIG, Anchorage Digital, Blockdaemon, Fireblocks, Gemini, Talos, Federici’s slide presentation showed.

Catch up fast: Recall investment bank Moelis & Co. just threw its hat in the ring, starting a unit to focus on blockchain deals in spite of the crypto winter.

Yes, but: The hurdles are many, she said.

Federici rattled off the issues in infrastructure — scalability, security/privacy, interoperability, access — also legal and regulatory issues, jurisdiction questions and ambiguity around how courts will recognize blockchain.

Plus the current state of global markets and digital assets.

What others are saying: Spencer Bogart, general partner at Blockchain Capital LLC, says startups and founders will have to make some sacrifices to stay flexible amid what could be a prolonged market downturn.

“Access to capital might be limited. Means, you might have the opportunity to raise. But you also have to be diligent about your burn, so you have at least 2-3 years of runway,” he tells Axios.

There are also bright spots. “We’ll see a lot of intense focus on the gaming space. The probability we have with a major hit game over the next 1-2 years is very high,” Bogart said.

Meanwhile, Coinbase Ventures in a blog post last week recapping its second quarter seemed to share Bogart’s opinion: “Web3 gaming remained a sector of heavy investment in Q2, with The Block estimating that US$2.6B+ was raised. Our activity over the last few quarters only strengthens our conviction.”

Our thought bubble: Perhaps the crypto winter will drive more general-fintech-meets-blockchain M&A.

Flashback: The exchange operator Kraken launched its eponymous venture arm in February 2021 led by Brandon Gath, Kirill Gourov and Federici.

Think modern crypto venture capital; the unit closed a US$65 million early-seed fund — its first — in December.

The firm’s crypto/fintech fund holds investments in 22 companies including, crypto lender Anchorage Digital, LimeWire (a different version of that LimeWire), and data analytics firm Messari.

Reality check: “This was like a mind-blowing thing for me,” she said. “Apparently there is no legal court in any country, globally, that has recognized blockchain as an immutable ledger or proof of ownership.”

Between the lines: If proof of ownership of a home was certified on the blockchain, it doesn’t hold up in courts.

• Editor’s note: This story has been corrected to reflect the correct the title for Akshi Federici. She is a partner at Kraken Ventures, not an operating partner.