In recent years, global financial giants from Visa to Stripe have announced investments in asset tokenization and on-chain infrastructure, seemingly symbolizing that traditional finance is fully embracing cryptocurrency technology. However, Columbia University professor Omid Malekan presents a counterpoint in a recent article: While these companies loudly discuss the efficiency and new opportunities of blockchain, they deliberately ignore the threat that 'going on-chain could undermine their own business models,' which may lead them to demand the sacrifice of decentralization in cryptocurrency to cater to their monopolistic interests.
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Traditional finance is heavily going on-chain? Malekan: They only talk about benefits, not survival crises.
In recent years, financial giants like DTCC, SWIFT, Visa, Stripe, and PayPal have actively embraced tokenization technology, emphasizing the high efficiency of 24/7 settlement and cross-border payments. However, Malekan points out a common phenomenon.
I do not buy it, because they avoid discussing the survival risks that on-chain technology poses to their existing business.
For example, US stocks are long-term stored in DTCC's centralized ledger, but the true end of tokenization is for companies to issue stocks directly on public chains; SWIFT's cross-border system may become unnecessary due to stablecoins. Payment giants Visa and PayPal's core revenue will also face the fate of being eroded by on-chain payments.
On-chain infrastructure disrupts monopoly models: Why are DTCC and Visa not afraid?
Malekan points out that the existence goal of public chains is to break the monopoly of centralized clearing, cross-border messaging networks, and closed payment systems. Public chains like Ethereum cannot capture market share without harming the operators of these existing centralized networks.
However, from the upper echelons of DTCC to Visa, very few openly acknowledge this structural threat, instead wrapping the status quo in terms like 'partial adoption' or 'collaborative experiments.'
He bluntly states that these financial institutions' aversion to risk, led by an older management team that advocates for their own business models, may result in unprecedented resistance to true transformation, even leading to its strangulation.
When blockchain becomes a 'puppet' of financial giants, does adopting cryptocurrency still make sense?
As 'institutional adoption' gradually becomes the mainstream narrative of the crypto market, Malekan's deepest concern is not whether traditional finance will fail, but rather:
They may leverage their existing market scale and regulatory compliance advantages to force the crypto industry to abandon the decentralization and censorship-resistant features of blockchain networks to cater to their own business models.
He cites that JPMorgan is vigorously promoting tokenized deposits and funds while lobbying to block external stablecoin interest payments; DTCC is creating a 'blockchain-skinned but essentially centralized database' enterprise chain; Citadel detests external stablecoins and tokenization while supporting closed networks controlled by private enterprises.
The worst part is that Malekan has also heard that including Stripe and other large L1/L2 teams are even considering gradually abandoning their decentralization plans to collaborate with financial giants.
Too many people in the crypto space have an inferiority complex towards traditional finance; they either lack faith in blockchain themselves or feel weary from not making money and will soon sell out.
Malekan: Cooperation is still important, but the bottom line cannot retreat.
Malekan does not oppose collaborating with traditional finance; he acknowledges that bringing companies on-chain can indeed lead to efficiency gains and market growth. But he emphasizes that the boundaries must be clear:
Traditional finance needs to embrace cryptocurrency to evolve; but cryptocurrency does not need to regress to please them.
As more financial institutions officially enter the field, he believes this dilemma will eventually arrive, and the only thing the crypto industry can do is to uphold the principles of decentralization and openness.
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This article reveals the illusion of financial giants embracing blockchain: Will cryptocurrency be 'tamed' and abandon decentralization ideals? First appeared in Chain News ABMedia.
