Wall Street's closed blockchains are a dead end: Etherealize head on the "race to the bottom"
The market is once again witnessing a dangerous trend: the largest financial institutions on Wall Street are enthusiastically returning to building isolated blockchain networks with restricted access. In my assessment, this is a fundamental mistake that not only fragments liquidity but also completely negates the key advantages of distributed ledger technology. Vivek Raman, co-founder and CEO of Etherealize, a company focused on institutional integration of Ethereum, has called this trend nothing less than a "race to the bottom," and I fully share that position.
Return to Isolation: Consortium Networks 2.0
The crux of the problem is that closed consortium chains created by banks and corporations do not interact with each other. Instead of creating a unified financial internet, we get a new set of "intranets" that undermine the two pillars of blockchain: interoperability and shared liquidity. We already went through this phase in 2016 with initiatives like R3 and Hyperledger, which never managed to scale. Current projects—Canton Network from Digital Asset, Arc from Circle, and Tempo from Stripe—are, in essence, "consortium chains 2.0," repeating the mistakes of the past.
Architectural Approach: Ethereum as the Base Layer
Raman proposes a fundamentally different architecture. Instead of creating parallel closed networks, privacy and access control should be implemented at the upper layers—in applications or in L2 solutions—on top of global open infrastructure. He draws a precise analogy with the internet: Ethereum is HTTP, and privacy layers are HTTPS. No one thinks of building a separate "closed internet" for banks, so why should we accept this in blockchain?
"We firmly believe that a global, open permissionless infrastructure is necessary as the base layer," emphasizes the head of Etherealize. This statement strikes at the very heart of the discussion. Financial institutions fear transparency but forget that it is openness that provides the network effect and trust that cannot be forged in an isolated system.
Notably, back in June, Raman highlighted the shift of traditional financial organizations from experiments to real-world use of Ethereum in business processes. This confirms that open networks are already ready for institutional workloads.
My conclusion: closed blockchains are an attempt to preserve the old paradigm of control, which contradicts the very nature of the technology. Wall Street risks building costly "digital fortresses" that will become obsolete the moment they are created. The real value lies in the composability and liquidity of open networks, and those who understand this first will gain a decisive advantage.