Wall Street's closed blockchains are a 'race to the bottom': opinion of the head of Etherealize
Recently, a worrying trend has emerged on Wall Street: major financial institutions are increasingly turning to closed blockchains with restricted access. However, in my view, this is a strategic mistake that could lead the industry into isolation and fragmentation, destroying the very essence of distributed ledger technology.
The Problem with Consortium Networks
Vivek Raman, head of Etherealize, rightly called this trend a "race to the bottom" in his recent analysis. Consortium networks created by banks and corporations not only fragment liquidity but also return us to the isolated systems that blockchain was supposed to eliminate. Closed circuits do not interact with each other, undermining two key advantages of the technology: system interoperability and liquidity concentration.
Instead of proliferating new closed networks, we need to build privacy and access restrictions on top of public infrastructure—at the application or L2 solution level. I fully share the position that Ethereum should serve as the base layer, analogous to HTTP, with additional restricted-access layers acting like HTTPS. This is the only way to preserve openness and interoperability without sacrificing confidentiality.
Lessons from the Past
Examples from the latest wave of "closed" solutions—Canton Network from Digital Asset, Circle's Arc project, and Stripe's Tempo—raise serious concerns for me. These are "consortium chains 2.0" that repeat past mistakes. We have already seen how the interbank initiative R3 and the corporate ecosystem Hyperledger, actively promoted since 2016, failed to gain proper traction. History teaches us that closed systems do not work in the long term.
"We firmly believe and have always held this position that a global, open permissionless infrastructure is needed as the base layer," Raman emphasizes. And I completely agree with him.
Notably, as early as June this year, traditional financial organizations began implementing Ethereum-based solutions in real business processes. This confirms that open systems are not only viable but also in demand. I believe that institutional players should reconsider their approach and pay attention to public blockchains, which offer far more opportunities for innovation and collaboration.