Traditional Finance's On-Chain "Conspiracy": Why the Crypto Embraced by Giants Is Destined to Fail?

Traditional financial institutions’ so-called “on-chain” activities are often a betrayal of the decentralized spirit. The more they enthusiastically embrace a particular form of the crypto world, the less likely that form is to succeed.
(Background: Crypto Popularization vs. Decentralization: An Unsolvable Paradox?)
(Additional context: Blockchain “decentralization” challenges global regulation—are they destined to conflict? Can they coexist?)

This is a warning: as traditional finance gradually embraces blockchain, the moves of the largest financial intermediaries are likely to precisely foreshadow future failure. The more they enthusiastically adopt a specific form of the crypto world, the less likely that form is to truly succeed.

Those giant exchanges, clearinghouses, banks, brokers, and payment providers—these household names—will, in the coming year, frequently make headlines for their “cautious” embrace of blockchain.

How these institutions “go on-chain” mainly reflects their desire to maintain their power and profits, rather than revealing some truth about the future of crypto.

This is not a critique of these institutions, nor some ideological conspiracy theory. First, it extends a core principle that underpins the entire crypto world: incentives drive behavior. Second, it acknowledges a fundamental contradiction that all these leaders must face and resolve.

Their power and profits stem from their central position within the financial infrastructure “pipelines.” System design and regulatory moats combine to allow them to earn enormous profits in an environment with little competition. The architecture of traditional finance has created specific “pipeline systems,” which they control. For decades, they have been consolidating this control.

The Depository Trust & Clearing Corporation (DTCC) has been around for 53 years, Visa for 67 years, SWIFT for over 50 years, and even the largest banks have histories spanning centuries.

In the careers of current managers of these institutions, they have never faced a real existential threat. Yes, Visa and MasterCard compete in high-end credit cards, large banks vie for top positions in foreign exchange trading, but their leaders have never worried about being completely ousted, never.

All of these companies, with market values in the trillions of dollars, revenues in hundreds of billions, and executives earning tens of millions, owe it to a single fact: there is only one financial system, and their position within it is almost unshakeable.

Then, crypto appeared. This is a second, currently entirely independent system. Not only that, its core goal is to change the architecture of finance—to build a “pipeline” that is not privately owned by anyone but open to all.

The anti-censorship nature of decentralized systems not only protects users but also builders and competitors. This feature ensures the competitive liquidity that traditional finance has long lost.

Any entrepreneur can connect to Ethereum, use it to process payments, or even further, build their own payment services. But almost no entrepreneur can access the Fedwire system of the Federal Reserve. Therefore, to start a company competing with proxy banks like J.P. Morgan, you must first become a client of J.P. Morgan.

Similarly, any tokenization startup worldwide can connect to permissionless blockchains like Ethereum. But no startup can access the “National Securities Clearing Corporation” (NSCC), which is part of the Depository Trust & Clearing Corporation (DTCC) and at the core of U.S. stock clearing. Startups can only use this infrastructure through clearing brokers like Bank of New York Mellon (BNY).

Now, guess who owns and manages DTCC? The answer is exactly such clearing brokers as Bank of New York Mellon.

Most people do not realize how anti-competitive the core “pipelines” of traditional finance are. If we compare this to the internet, it’s like only a few companies—Google, Amazon, etc.—own all the servers, and the only way to compete in advertising or e-commerce is to pay them.

So, when the crypto world becomes too important to ignore, what will these industry giants—who enjoy huge profits, are no longer used to competition, and have stable positions—do?

Will they voluntarily give up power and profits? Jump into a fiercely competitive “hell” from their comfortable environment of full infrastructure control? Lower their earnings, watch their stock prices fall, and take fewer bonuses?

I believe they will not.

But don’t just take my word for it. Put yourself in the shoes of the smart people running these institutions and think about what they might consider.

You operate a subsidiary of DTCC, arguably one of the most centralized companies on Earth, protected by half a century of securities law. Would you embrace tokenization schemes built on Ethereum, where anyone can compete with you? Or would you instead support a corporate chain, whose leadership has been whispering sweet nothings in your ear for years?

“Mine is a permissioned chain. I decide who can verify transactions, who can use it, what the fees are, who can view data, and even the supply of my native tokens. I hold all the power. I can invite anyone to join my network, but I choose you…”

Now, again, put yourself in the shoes of the leaders of the largest traditional exchanges and payment processors. Would you choose to embrace the crypto version they expect? The decentralized, censorship-resistant version that allows anyone—from crypto-native startups to non-financial giants like Google, Meta, Walmart—to compete with you directly?

Or would you prefer 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 as you, the same Patagonia vests. I know what you need. I’ve designed a centralized blockchain that allows you to maintain power and dominance. My goal is not to overthrow or replace you but to help you improve efficiency.”

Traditional financial institutions are large and bureaucratic. They employ many smart people, some of whom truly understand the social benefits that permissionless infrastructure, smart contracts, and tokenization can bring. But their leaders are in their positions precisely because they deeply understand and embrace centralization.

So, if you were the CEO of one of the world’s largest banks, sitting at the top of a shiny skyscraper, what would you do? For years, you’ve publicly opposed cryptocurrencies, calling them tools for fraud and crime. Some of your younger executives are unconvinced—they see promise in Bitcoin, Ethereum, Solana, and hope the company moves in that direction. But then, a more senior, higher-ranking executive presents an alternative:

“Blockchain technology is good, but decentralization is bad. Let’s build or control a centralized blockchain for our clients. We can offer tokens and smart contracts, but everything is under our control. We are the greatest bank in the world. Being in control is true social welfare.”

As CEO, which would you choose?

As 2025 draws to a close, my final advice to everyone is: beware of the “signals” these institutions try to send during their “on-chain” process. The “crypto version” they embrace, support, fund, and lobby for is very likely not the final winning version.

I am confident that the vision they love will ultimately fail.

If you want to be a “suit enthusiast,” go ahead, but history will not praise you. A permissionless blockchain is meaningless without decentralization.

This is not to say that centralization itself is bad or must be abolished in all fields. Rather, it does not belong on-chain. The leaders of these largest traditional financial institutions do not think so, and that’s irrelevant. To defend them: they are merely protecting their own interests.

So, what is your excuse?

As traditional finance gradually goes on-chain, the actions of these major intermediaries are precisely the opposite indicators of the future reality. The more they enthusiastically embrace a particular form of the crypto world, the less likely that form is to succeed.

The future will be entirely different from the past.