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

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Written by: Omid Malekan

Translated by: AididiaoJP, Foresight News

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

These giant exchanges, clearinghouses, banks, brokers, and payment providers—these household names—will make headlines over the next year 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, SWIFT for over 50 years, and even the largest banks are centuries old.

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

Their trillions of dollars in market value, hundreds of billions in revenue, and tens of millions in executive compensation all stem from 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 system” that is not privately owned by anyone but open to all.

Decentralized systems’ resistance to censorship 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 to process payments, or even further, build their own payment services. But almost no startup can access the Fedwire system of the Federal Reserve. Therefore, to create a company that competes 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 BNY Mellon.

Now, guess who owns and manages DTCC? The answer is exactly the kind of clearing broker like BNY 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 a few companies—Google, Amazon, etc.—own all the servers, and your 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 used to no competition, and have secure positions—do?

Will they voluntarily give up power and profits? Jump from their comfortable environment of owning all infrastructure into a fiercely competitive “hell”? Lower their profit margins, watch their stock prices fall, and accept smaller bonuses?

I believe 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? On that platform, 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?

“My chain is permissioned. I decide who can validate 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, imagine the leaders of the largest traditional exchanges and payment processors. Would you choose to embrace the crypto version that such people expect? The decentralized, censorship-resistant version that allows everyone—from crypto-native startups to non-financial giants (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 isn’t to overthrow or replace you, but to help you increase 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 understand and embrace centralization.

So, if you are the CEO of one of the world’s largest banks, sitting at the top of a brand-new skyscraper, what would you do? Over the years, you’ve publicly opposed cryptocurrencies, calling them tools for fraud and crime. Some of your younger executives are indifferent—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 what truly benefits society.”

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” efforts. The crypto versions they embrace, support, fund, and lobby for are very likely not the final winners.

I am convinced that the vision they cherish will ultimately fail.

If you want to be a “suit enthusiast,” go ahead, but history will not look kindly upon it. A decentralized blockchain is meaningless without decentralization.

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

So, what’s your excuse?

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

The future will be radically different from the past.