Author: Omid Malekan
Compiled by: AididiaoJP, Foresight News
This is a warning: as traditional finance gradually embraces blockchain, the moves of the largest financial intermediaries are likely to precisely signal future failure. The more enthusiastically they embrace a particular form of the crypto world, the less likely that form is to truly succeed.
Those giant exchanges, clearinghouses, banks, brokerages, and payment providers. These household names will frequently make headlines in the coming year for their 'cautious' embrace of blockchain.
How these institutions go 'on-chain' primarily reflects their desire to maintain their own power and profits, rather than revealing some truth about the future of crypto.
This is not a criticism of these institutions, nor is it some ideological conspiracy theory. Firstly, it is an extension of a core principle underpinning the entire crypto world: incentives determine behavior. Secondly, it acknowledges a fundamental contradiction that all leaders of these institutions must face and resolve.
Their power and profits stem from their central position in the financial infrastructure 'pipeline'. A combination of system design and regulatory moats allows them to reap huge profits in an environment with almost no competition. The architecture of traditional finance has created specific 'pipeline systems,' and they control the critical pipes. For decades, they have been consolidating this control.
The Depository Trust & Clearing Corporation (DTCC) is 53 years old, Visa is 67 years old, SWIFT is over 50 years old, and even the largest banks are centuries old.
In the careers of the current managers of these institutions, they have never faced a real existential threat. True, Visa and Mastercard compete in the premium credit card space, and big banks fight for rankings in foreign exchange trading volume, but their leaders have never worried about being completely knocked out of the game. Never.
The multi-trillion dollar market capitalizations, hundreds of billions in revenue, and multi-million dollar executive compensations of these companies all stem from a single fact: there is only one financial system, and their position in it is almost rock-solid.
Then, the crypto world emerged. This is a second, and currently completely independent, system. Moreover, its core goal is to change the architecture of finance, to build a 'pipeline system' where the most important 'pipes' are not owned by anyone but are open to all.
The censorship resistance of decentralized systems protects not only users but also builders and competitors. This feature ensures competitive liquidity that has long disappeared from traditional finance.
Any entrepreneur can connect to Ethereum to process payments, or go further and build their own payment service. But almost no entrepreneur can connect to the Fedwire system of the Federal Reserve. Therefore, to start a company to compete with a correspondent bank like JPMorgan Chase, you must first become a client of JPMorgan Chase.
Similarly, any tokenization startup globally can connect to permissionless blockchains like Ethereum. But no startup can connect to the National Securities Clearing Corporation (NSCC), which is at the heart of US stock clearing and part of the DTCC. Startups can only use this infrastructure through clearing brokers like Bank of New York Mellon (BNY).
Now guess who owns and manages the DTCC? The answer is clearing brokers like Bank of New York Mellon.
Most people don't realize how anti-competitive the core 'pipes' of traditional finance are. To use an internet analogy, it would be like Google, Amazon, and a few other companies owning all the web servers, and the only way to compete with them in advertising or e-commerce is to pay them.
So what do these hugely profitable, long-unaccustomed to competition, entrenched industry giants do when the crypto world has become too important to ignore?
Will they voluntarily give up power and profits? Voluntarily jump from the comfort of owning all the infrastructure with no competitive pressure into a fiercely competitive 'hell'? Lower the drawbridge on their efficient moats and invite invaders in? Decide to make less money, watch their stock price fall, and take smaller bonuses?
I don't think so.
But don't just take my word for it. Put yourself in their shoes and imagine what the smart people running these institutions would think.
You run a subsidiary of the DTCC, arguably one of the most centralized companies on Earth, its monopoly protected by half a century of securities laws. Would you embrace a tokenization solution built on Ethereum, a platform where anyone can compete with you? Or would you throw your weight behind a corporate chain whose leadership has been whispering sweet nothings in your ear for years?
'My chain is permissioned. I decide who can validate transactions, who can use it, what the fees are, who can see the data, even the supply of my native token. I hold all the power. I can invite anyone to join my network, but I chose you...'
Now, put yourself in the shoes of the leaders of the largest traditional financial exchanges and payment processors. Would you choose to embrace the version of crypto that someone like me expects? The one that is decentralized, censorship-resistant, and allows everyone from crypto-native startups to non-financial industry giants (Google? Meta? Walmart?) to compete with you head-on?
Or would you embrace the version based on the premise that 'your company is crucial today and must remain so in the future'?
'I've worked in your industry for decades. I wear the same suits, the same Patagonia vests. I know what you need, I designed a centralized blockchain that lets you maintain your power and dominance. My goal is not to disrupt or replace you, but to help you become more efficient.'
Traditional financial institutions are large and bureaucratic. They employ many smart people, some of whom truly 'get' the social benefits of permissionless infrastructure, smart contracts, and tokenization. But their leaders are in their positions precisely because they understood and embraced centralization.
So, if you were the CEO of one of the world's largest banks, sitting on the top floor of a brand new skyscraper? For years, you've publicly opposed cryptocurrency, calling it a tool for fraud and crime. Some of your younger executives disagree; they are bullish on Bitcoin, Ethereum, Solana, and want the company to move in that direction. But then, a more senior, higher-ranking executive proposes another plan to you:
'Blockchain technology is good, but decentralization is bad. Let's build or control a centralized blockchain for our own customers. We can offer tokens and smart contracts, but we control everything. We are the world's greatest bank. It is for the social good that we are in control.'
As the CEO, which one would you choose?
As 2025 draws to a close, my final advice to everyone is this: be wary of the 'signals' these institutions are trying to send in their process of going 'on-chain'. The version of 'crypto' that they embrace, heavily support, fund, and lobby for is unlikely to be the version that ultimately wins.
I am convinced that the vision they favor is doomed to fail.
If you want to be a 'suit-chaser', go ahead, but history will not look kindly upon it. A blockchain without decentralization is meaningless.
This is not to say that centralization itself is bad, or that it must be abolished in all areas. But it does not belong on-chain. It doesn't matter that the leaders of these largest traditional financial institutions don't think so. To play devil's advocate for them: they are just protecting their own interests.
So, what's your excuse?
As traditional finance gradually goes on-chain, the actions of the largest intermediaries are precisely an inverse indicator of the true future. The more enthusiastically they embrace a particular form of the crypto world, the less likely that form is to succeed.
The future will be fundamentally different from the past.
