The End of Trust Intermediaries: What AI and Blockchain Do Together

Picture a Tuesday a few years out. A homeowner in Austin has not opened a bank account in two years. Overnight, her household AI settled eleven thousand micro-transactions with the regional energy grid, netting her power bill to eleven cents. It rebalanced her real-estate exposure in under a second when foot-traffic sensors in one market turned down. And it did something that would have been impossible a few years earlier: it identified a risk that no existing financial instrument addressed, so it designed one, negotiated the terms with the AI agents of the counterparties, verified the structure on-chain, and activated it before she finished her coffee. No broker. No exchange. No clearinghouse. No bank.

Every piece of that morning is a logical extension of technology that exists today in early form. The question is not whether this world is possible. It is how quickly it arrives, and what happens to the institutions it renders unnecessary.

Why every financial institution exists

Start with a claim that sounds larger than it is: every major financial institution in human history exists for one reason. Two strangers could not trust each other.

Banks, insurers, exchanges, clearinghouses, title companies, credit bureaus, notaries, rating agencies. These are not features of a modern economy. They are workarounds for a constraint. They verify who you are, confirm that an asset is real, judge whether you are good for the money, and enforce the deal when parties cannot see into each other’s ledgers. They are trust intermediaries, and they have always charged a fee for the service.

The economics here are settled. Ronald Coase showed in 1937 that institutions emerge when transacting directly, finding the counterparty, checking their claims, enforcing the terms, costs more than paying a third party to handle it. Oliver Williamson named the specific costs: search, bargaining, monitoring, enforcement. The implication is precise. When a technology drives all of those costs below the overhead of maintaining the intermediary, the institution does not become obsolete in principle. It becomes obsolete in arithmetic.

Here is the number that should hold a financial executive’s attention. Thomas Philippon’s work in the American Economic Review found that the unit cost of financial intermediation has sat at roughly two percent of intermediated assets for 130 years. Every advance in information technology over that span, and institutions absorbed the efficiency gains rather than passing them through. Across hundreds of trillions in intermediated assets, that two percent is an implicit tax on trust, embedded in every transaction.

The two problems, solved separately, then together

What makes this moment different is not one technology. It is two, each solving half of a problem neither could finish alone.

Blockchain solves trustless verification. It proves that something happened, exactly as specified, without relying on a third party to vouch for it. What it cannot do is decide whether the thing should happen. It gives you verifiable but unintelligent rails.

AI solves trustless judgment. It assesses whether the risk is priced correctly, whether the counterparty is creditworthy, whether the asset is fairly valued, without a human in the loop. What it cannot do is prove its own work. An AI decision is a black box, and a black box is itself a trust problem.

Put them together and you get something no institution has ever been able to offer: a system that can assess a complex condition, render a judgment, execute a binding action, and produce a cryptographically immutable record proving that every step, from the data going in to the logic to the execution, happened as specified. Call it verifiable intelligence. It is the first technology that can decide and prove at the same time, judge and verify, reason and enforce.

When an AI agent can assess creditworthiness, encode the terms in a self-executing contract, settle on a verified ledger, and hand back an immutable audit trail, the economic case for the bank in the middle does not weaken. It collapses. The costs that justified the intermediary have fallen below the cost of keeping it.

This arrives in stages, not all at once

The popular version of this story is agents with digital wallets making payments. That is real, and it is early. Autonomous payment rails are live now: one agent-commerce protocol processed over 100 million transactions by late 2025, and Visa has aligned its own agent protocol with that infrastructure. But payments are one stage of a longer arc, and the later stages look nothing like today’s financial plumbing.

The near term is contracts assembled dynamically by AI from libraries of audited, verified modules. Further out, contracts stop being documents and become continuous computations: an adaptive loan has no fixed rate, only a rate function that optimizes in real time against income, collateral value, and macro conditions. Further out still, AI systems begin inventing structures with no human precedent, and the neat taxonomy of finance, debt versus equity versus derivative versus insurance, starts to blur into a single category: computationally optimized, verifiable economic relationships, each adapting continuously, each provable on-chain.

You can already see the direction in the data. Tokenized real-world assets grew from under 5 billion dollars in 2022 to over 26 billion in early 2026. BlackRock’s tokenized liquidity fund reached 18 billion across nine networks in under two years. BCG and others put the longer-run market in the tens of trillions. These are measured trajectories, not forecasts.

The objections worth taking seriously

An argument this large has to meet its strongest counterarguments honestly, and there are real ones.

Incumbents co-opt disruption rather than dying to it. True, and it is already happening. JPMorgan’s settlement network, BlackRock’s tokenized fund, Visa’s agent protocol are incumbent adaptations. But co-option does not preserve the institution. It transforms it. The banks building blockchain rails are funding their own reinvention, whether they frame it that way or not.

People distrust algorithms, especially after watching one err. Also true, and well documented. But the same research shows most people choose the algorithm when they have not seen it fail, and the pattern across analogous shifts is consistent: index funds, algorithmic pricing, the disappearance of the travel agent. Behavioral resistance yields to demonstrated performance, usually over a five-to-ten-year cycle.

Correlated AI agents could fail together at machine speed. This is the objection that matters most, and it is not hypothetical. It is the dynamic behind the 2010 Flash Crash, the Knight Capital failure, and the August 2024 carry-trade unwind. Dissolving trust intermediaries does not remove the need for systemic oversight. It changes its shape, from regulating institutions to regulating protocols: diversity in agent training, circuit breakers at the infrastructure layer, real-time monitoring for correlated behavior before it cascades. Whoever builds this system carries a real obligation to engineer resilience into the substrate, not just efficiency.

None of these are reasons the transition will not happen. They are reasons to build it with the same rigor as the technology itself.

What this means for the people building it

Three implications stand out.

For financial institutions: separate your function from your form. The function, manufacturing trust between parties, is not going away. The form is. The institutions that survive will understand they are in the trust business, not the banking or insurance business, and will move from sitting atop the rails as gatekeepers to building and maintaining the rails themselves.

For investors: position for the substrate, not the application. The market for agents that make payments is interesting. The market for the infrastructure that replaces the entire institutional trust layer is something else. Application-layer tools commoditize. The verification and settlement infrastructure underneath does not.

For regulators: regulate the protocol, not the ghost of the institution. Oversight built for entities that mediate between actors does not fit a world where the protocol is the institution. That means algorithmic auditing over financial auditing, continuous monitoring over periodic examination, protocol-level standards over entity-level licenses. The regulators who adapt will set the parameters the whole system runs inside.

Back to Tuesday

That Tuesday does not exist yet. Its foundations are being poured now. Five thousand years of building trust through institutions, and the observable trajectories, AI compute scaling several-fold a year, tokenized assets past 26 billion and accelerating, autonomous transaction infrastructure already in production, point to a decade or less to build the substrate that makes those institutions economically unnecessary.

The question is no longer whether. It is who builds the new infrastructure, who designs its ethical constraints, who ensures its resilience, and who gets left behind when Tuesday arrives.

Rob Frasca is co-founder and managing partner of COSIMO Digital. Dr. Zdenka Cumano is Chief AI Officer at AI Leader Edge and professor of AI and Big Data for Executive Education at Florida Atlantic University. This article is adapted from their working paper, The End of Trust Intermediaries.