In recent years, from Visa to Stripe, global financial giants have announced investments in asset tokenization and on-chain infrastructure, seemingly symbolizing that traditional finance is fully embracing crypto technology. However, Columbia University professor Omid Malekan, in a recent article, presents a contrasting view: while these companies loudly proclaim the efficiency and new opportunities of blockchain, they deliberately ignore the threat that "going on-chain could undermine their own business models." This could lead them to demand that crypto sacrifice its decentralized characteristics to cater to their monopolistic interests.
Traditional finance going all-in on blockchain? Malekan: They only talk about the benefits, not the existential crisis.
Financial giants such as DTCC, SWIFT, Visa, Stripe, and PayPal have actively embraced tokenization technology in recent years, emphasizing the high efficiency of 24/7 settlement and cross-border payments. However, Malekan points out a common phenomenon.
I don't buy it because they avoid talking about the survival risks that blockchain technology poses to their existing businesses.
For example, while US stocks have long been stored on DTCC's centralized ledger, the true endpoint of tokenization is companies issuing stocks directly on public blockchains; SWIFT's cross-border system may become unnecessary due to stablecoins. The core revenue of payment giants Visa and PayPal will also face the fate of being eroded by on-chain payments.
On-chain infrastructure disrupts monopoly models: Why aren't DTCC and Visa afraid?
Malekan points out that the goal of public blockchains is to break the monopoly of centralized clearing, cross-border messaging networks, and closed payment systems. It is impossible for public blockchains like Ethereum to gain market share without harming the owners and operators of these existing centralized networks.
However, from top executives at DTCC to Visa, very few have publicly acknowledged this structural threat, instead using terms like "partial adoption" or "cooperative trials" to mask the status quo.
He stated bluntly that these financial institutions' aversion to risk and the dominance of older management teams who champion their own business models mean that genuine transformation may face unprecedented resistance or even be stifled.
When blockchain becomes a "puppet" of financial giants, is there still any point in adopting encryption?
As "institutional adoption" gradually becomes the mainstream narrative in the crypto market, Malekan's deepest concern is not whether traditional finance has failed, but rather:
They may leverage their existing market size and regulatory compliance advantages to force the crypto industry to abandon the decentralized and censorship-resistant characteristics of blockchain networks in order to suit their own business models.
He cited examples such as JPMorgan Chase's vigorous promotion of tokenized deposits and funds, and its lobbying efforts to prevent external stablecoins from paying interest; DTCC's creation of an enterprise blockchain that "has the appearance of a blockchain but is essentially a centralized database"; and Citadel's aversion to external stablecoins and tokenization, while supporting closed networks controlled by private companies.
Worst of all, Malekan has also heard that Stripe and other large L1/L2 teams are even considering gradually abandoning their decentralization plans in order to partner with financial giants.
There are too many people in the crypto space who have an inferiority complex towards traditional finance. They either don't believe in blockchain itself, or they are bored because they haven't made money and will soon sell themselves out.
Malekan: Cooperation remains important, but bottom lines cannot be compromised.
Malekan is not against collaborating with traditional finance; he acknowledges that businesses adopting blockchain technology can indeed improve efficiency and drive market growth. However, he emphasizes that clear boundaries must be drawn:
Traditional finance needs to embrace cryptocurrencies to evolve; but cryptocurrencies don't need to regress in order to please them.
He believes this predicament will eventually arrive as more financial institutions officially enter the market, and the only thing the crypto industry can do is to adhere to the principles of decentralization and openness.
This article exposes the illusion of financial giants embracing blockchain: Will cryptocurrencies be "domesticated" and abandon the ideal of decentralization? It first appeared on ABMedia, a ABMedia .
