Wall Street's closed blockchains are a "race to the bottom": Etherealize CEO explains why privacy must live on a public foundation
In recent months, Wall Street has once again become enamored with creating closed blockchain consortia. However, in my firm belief, this trend is leading the industry into a dead end. Vivek Raman, co-founder and CEO of Etherealize, a company positioning Ethereum as the base layer for institutional finance, has openly called this trend a "race to the bottom."
The problem I see, along with Raman, is that closed networks with restricted access fragment liquidity into isolated pools. Instead of unifying the market, they return us to the very siloed systems that blockchain technology was meant to eliminate. The key advantages—interoperability and liquidity concentration—are completely nullified when these networks do not interact with one another.
Privacy as an overlay, not a foundation
My position, shared by the head of Etherealize, is that privacy and access control should not be properties of the base layer itself. It is more logical to implement them at the application or L2 solution level, on top of open infrastructure. Raman offers an elegant analogy: in this scheme, Ethereum is HTTP, the global communication protocol, while private layers are HTTPS, which adds encryption and security without breaking the underlying network.
The new wave of "closed" projects, such as Canton Network from Digital Asset, Arc from Circle, or Tempo from Stripe, is essentially "consortium chains 2.0." We already went through this in 2016 with R3 and Hyperledger initiatives, which never achieved widespread adoption. History is repeating itself, and I fear, with the same outcome.
"We firmly believe and have always held this position that a global, open permissionless infrastructure is needed as the base layer," Raman emphasizes. And this is not just idealism. Already in June, we observed traditional financial institutions beginning to implement Ethereum-based solutions in real business processes, confirming the practical value of open systems.
My verdict: closed blockchains are an attempt to force revolutionary technology into old corporate frameworks. They may provide an illusion of control, but they strip away what matters most—network effects and global liquidity. Strategically minded institutional players have already realized that the future lies in hybrid models, where privacy is a setting, not an architecture. Investors should be cautious: investments in "isolated" consortia could turn into missed opportunities amid the growth of open ecosystems.