Wall Street financial institutions are once again looking at private blockchain networks. Vivek Raman, CEO and Co-founder of Etherealize, warns that this trend is nothing more than a race to the bottom. Closed networks are believed to only repeat past mistakes instead of unlocking the potential of distributed ledger technology.
Raman highlighted several projects such as Digital Asset’s Canton Network, Circle’s ARC, and Stripe’s Tempo. He labeled these initiatives as consortium chains version 2.0. These private systems build silos that are not interconnected. This condition dampens interoperability and holds back global liquidity, two things that flow freely on public blockchains like Ethereum or Solana.
Repeating the Failures of Old Consortia
History holds a poor track record for exclusive interbank networks. In 2016, a number of major banks joined forces to form the R3 and Hyperledger consortia. That effort collapsed quickly. Financial giants like Goldman Sachs, Morgan Stanley, and Santander simultaneously withdrew from R3 even before that year ended.
Christian Catalini of the MIT Cryptoeconomics Lab sees the same pattern happening today. The current phase is characterized by selling corporate products to large enterprises. According to Catalini, this approach risks negating the competitive advantage of blockchain. All the benefits of decentralization evaporate once the rules of the game are set by selected anchor entities.
A Different Direction from BlackRock
Amid the trend of closed networks, BlackRock is taking a different path. Their Ethereum-based fund, BUIDL, has begun complying with a US stablecoin regulatory framework called the GENIUS Act. The move by the world’s largest asset manager underscores that institutional adoption can rely on open public networks as long as regulations are clear.
Etherealize itself stands in the open network camp. The startup was born from an initial grant from Vitalik Buterin and the Ethereum Foundation in January 2025. They then secured $40 million in Series A funding in the same year to develop the public ecosystem.
Ultimately, the choice between public and private networks is about vying for control. Banks may feel safer playing in their own high-fenced backyards. But for the general users and investors, true liquidity will eventually flow to the open sea that requires no permission to enter.
Reported from CoinDesk.
Read also: What Is DeFi (Decentralized Finance)?
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.