Wall Street's interest in cryptocurrency has surged, with major firms like BlackRock launching record-breaking Bitcoin ETFs. However, most institutional trading remains off-chain due to blockchains' failure to meet performance standards. Annabelle Huang of Altius Labs argues that upgrades are needed to bring institutions on-chain.
Wall Street’s appetite for crypto is stronger than ever. BlackRock’s Bitcoin ETF has broken inflow records, while Fidelity and VanEck have introduced new spot products. The Nasdaq has even hinted at expanding its digital asset trading infrastructure. Yet, almost none of this activity occurs on-chain. Institutions treat crypto as a legitimate asset class for investment but not as an operational venue. The bulk of trading, settlement, and market-making happens on private servers and traditional rails.
The core issue is that current blockchains do not meet institutional standards for speed, reliability, and resilience. As Annabelle Huang, co-founder and CEO of Altius Labs, notes, "Despite record levels of institutional investment, most Wall Street firms are still trading off-chain." Blockchains often congest under stress, leading to unpredictable transaction failures and fluctuating gas fees. Optimistic settlement in Layer 2s or rollups can require rollbacks, reversing trades. Blockchain latency, ranging from seconds to minutes, lags behind traditional markets where firms invest millions in fiber optic cables for nanosecond advantages.
Institutions prefer crypto ETFs, allowing exposure via familiar, optimized systems. To attract on-chain trading, blockchains must exceed traditional speeds. Huang suggests upgrades like instruction-level parallelism with deterministic conflict resolution to process trades simultaneously without errors, eliminating I/O bottlenecks, and offering VM-agnostic plug-in connectivity for seamless integration. Publishing real-world performance data on actual hardware would build trust.
Off-chain trading concentrates liquidity in private systems, reducing transparency and limiting crypto's innovative potential, especially for tokenized real-world assets. However, progress is evident: Robinhood’s launch of its own blockchain signals institutions taking initiative. Once blockchains prove faster and more transparent, Huang predicts a shift on-chain, transforming crypto from an asset to a market-moving technology.