Wall Street is Swooping on Crypto as Suits Replace Hoodies: A New Dawn for Digital Assets

Key Takeaways

• TradFi lives on through DeFi
• Will Wall Street bring an end to crypto anarchy?
• Crypto development roadblocks

Anyone involved with traditional investment channels such as Wall Street, or investing in crypto should be aware of the shift of paradigm going on in the crypto world. The entrance of huge corporations such as BlackRock and Fidelity into the crypto market signals the beginning of the end of lawless crypto, as we’ve always known it. 

Back in the day, crypto essentially survived through word-of-mouth. There were no strict regulations.

You could use your crypto to buy anything you wanted, including illegal substances from platforms such as Silkroad.

The reason was that there was no regulation or supervision of the technology. All we had were codes assigned to wallets that could be owned by just about anyone in the world.

Tokens went from one wallet to another, enabling contracts that were attached to purchases of products or services that no one in the world paid attention to. Understandably, it was a safe haven for criminal activity as it was completely out of the spotlight of any legal enforcement agencies.

Things got a little more serious when businesses started developing around crypto, creating new avenues for profits and revenues. While there were preliminary regulations to help things stay somewhat lawful, loopholes rose as opportunities for the greedy. Crypto disasters such as FTX really brought attention to crypto, enticing governments to pay more attention to how crypto can be abused.

While we can’t say that regulations in place now are water-tight, we can say that regulating agencies learned a lesson with each blow, be it FTX, Celsius, Terra, or others. 

Crypto, Suits, And Ties

Crypto is morphing now into what it would eventually have become anyway the longer it survived.

After all, the technology is based on transferring funds securely and efficiently, a goal any financial institution in the world would want to achieve. So, it’s no surprise that financial institutions took steps over the years to mold crypto into what it eventually became, a successor to traditional finance. 

CEO of BlackRock, Larry Fink described it perfectly as it is, “digitizing gold”. He was basically referencing the decentralized nature of crypto, specifically Bitcoin.

The head of the world’s biggest asset management firm was referring to how gold maintained its value, regardless of the currency of the country that holds it. And, that’s exactly the jist behind crypto. The whole idea was to disconnect from traditional economics and finance, giving people the choice to use a currency that fairs the same anywhere in the world.

Now, corporations such as BlackRock are banking on the decentralized power of crypto. After all, corporations, just like everyday individuals, also want to shield themselves from inflation and fluctuating fiat currency values. 

For that very reason, corporations, seemingly led by BlackRock, as well as governments are now among the key attendees in most major crypto summits . “Crypto bros” are now being replaced by corporate figures. Phrases such as “Doge going to the moon” are now replaced by phrases such as ETFs and quotes from regulating bodies. 

Is Corporate Crypto Takeover A Bad Thing?

That really depends on how you look at it. At its essence, Bitcoin and blockchains were supposed to be one way to help us escape corporate and governmental supervision. 

Back in 2013, the founder of Nxt, a platform that aimed to improve upon Bitcoin’s blockchain technology, BCnext wrote a blog post that highlighted the whole point behind crypto. Unfortunately, the blog has since been taken down, but among the key statements in was

“Trust no one. This is a very important principle. Nxt doesn’t rely on trust, but solves the problem of trust in another way. It evolves to a system that doesn’t care about trust because everything will be very clear. Transparency extended to its absolute end leads to an inability to cheat. This removes necessity of wondering if anyone should trust anyone else.”

And, that’s the basis of of the corporate takeover of crypto. Unfortunately, the common person has grown distrusting of major corporations, be it financial institutions like BlackRock or tech companies like Meta. 

So, naturally, the argument against said corporate takeover is that we’d be entrusting the same corporations that we already distrust with a technology that was supposed to be free us from them in the first place.

Corporate Protection

However, there’s another way of looking at it. The government has unfortunately failed to protect consumers from crypto failures such as FTX and Celsius because these companies based their entire business plans on crypto.

Companies like BlackRock, however, already have well-established business portfolios. To put things into perspective, BlackRock manages assets north of $9 trillion, including shares in major corporations such as Disney, Uber, Spotify, and so many more. That means these companies are unlikely to crash and fail to pay their customers back.

Perhaps the biggest concern would have to be regarding market manipulation. If companies like BlackRock already own a lot and aim to multiply their profits at any given time, what’s stopping them from rigging the crypto market to fit their personal agendas?

Well, that’s when the government plays a crucial part. Regulating bodies such as the SEC are refusing to accept ETF applications that would allow these companies to enter the market without providing water-tight guarantees that their operations will stay completely transparent to the government, hence removing the chance of any foul play. 

As things stand, major corporations including BlackRock and Fidelity are partnering up with Coinbase, the biggest US-based exchange to establish shared-security agreements with the government. This, in itself, is quite ironic considering Coinbase itself is in a legal battle with the SEC.

So, at this point, the situation can be summarized as “We’ll see what happens”. But, it seems like traditional finance companies are joining the decentralized finance world one way or another.