A Tale of Two Crypto Camps — April 2025 in Review

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A Tale of Two Crypto Camps — April 2025 in Review

The world is wrestling with Trump’s on-and-off tariffs and their attendant side effects, such as retaliatory tariffs, whipsawing markets, and what appears to be trouble in the U.S. sovereign bond market. The speed at which this is happening is dizzying, making commenting on it futile. A day later, the world can look very different. 

So instead, I will write about a slower-moving trend I’ve noticed in the past couple of months: As large swaths of crypto increasingly come to resemble Sodom and Gomorrah, traditional financial institutions are embracing crypto, and it seems for the right reasons.

Traditional finance institutions, historically cautious or dismissive of crypto, are championing foundational crypto ideals—decentralization, transparency, and immutability—while many newer crypto enthusiasts, those entering post-2020, have primarily abandoned these principles in favor of pure speculation and profit-driven motives.

Institutional figureheads now regularly extol crypto’s revolutionary qualities. They stress the benefits of decentralization to improve security, transparency to foster trust, and immutability to protect against fraud. This rhetoric aligns them closer to the OG crypto user base than today's typical crypto participant.

Take, for example, Blackrock's Head of Digital Assets, Robbie Mitchnick, who recently spoke at the Digital Asset Summit about why Blackrock started with Ethereum for BUIDL, a tokenized money market fund.

"There was no question that the blockchain on which we would start our tokenization would be Ethereum, and that's not just a BlackRock thing. That's the natural default answer. That's important… Clients have chosen to value decentralization, credibility, and security. And that is a great advantage that Ethereum continues to have."

Conversely, most recent crypto entrants seem to be defined primarily by their skepticism and speculative appetite—a kind of crypto nihilism. Of course, there are many reasons for this, but one certainly comes from a string of failures, or perceived failures, within the crypto industry. Setting aside world-class fraudsters like SBF, Richard Heart, and Do Kwon, even good decentralized projects have had troubles.
Ethereum is the most well-known one. In 2016, a vulnerability in The DAO, an early decentralized investment fund, allowed an attacker to drain around $60 million worth of ETH. In response, the Ethereum community, led by Vitalik Buterin, voted to execute a controversial hard fork to reverse the hack and return the funds. Essentially, they rolled back the chain, immutability be damned.

Many other decentralized projects have struggled to deliver on their decentralization promises. MakerDAO’s decentralized DAI stablecoin became largely backed by centralized stablecoins after the March 2020 market puke, undermining its claims of censorship resistance. Layer-2 solutions often function as glorified multi-signature wallets, where many individuals retain control. Solana’s repeated network halts and manual restarts have challenged the credibility of its decentralization claims. More recently, Hyperliquid delisted a token far below the current market price after an attacker attempted to exploit an illiquid market on the exchange. This ostensibly makes it seem like crypto boasts of decentralization without caring about it.

This shift in crypto culture is also massively influenced by broader shifts in sentiment. Faced with economic disenchantment, widespread institutional mistrust, and deep financial insecurity, young people increasingly see stock trading, real estate, and crypto as a means to escape what appears to be a rigged system. From this perspective, foundational crypto ideals such as immutability can seem naïve or even irrelevant.

On the other hand, traditional financial institutions entering crypto come from a completely different vantage point. First of all, they don’t have a get-rich-quick attitude–they’re already filthy rich. They are looking for and investing in crypto projects that will be value-creating, not extractive.

Second, they have a low time preference, measuring investments in years and decades. On that timescale, crypto is a real innovation promising substantial practical benefits. They don’t get frustrated by the seeming lack of progress in the past couple of years because they can see the tremendous progress made in 16 years.

Third, these institutions are more pragmatic. They understand that decentralization can take time to achieve. Look at Ethereum's decentralization progress since the hard fork, Solana’s much-improved validator set, and Hyperliquid is already more transparent than any centralized exchange.

Thus, institutions now sound more enthusiastic about the technology than most people on Crypto Twitter (CT). This doesn’t mean I’m an advocate for institutions in crypto because I’m very wary of them. Nor does this mean I immediately believe what the Larry Finks of finance say about crypto. Who knows if they believe what they’re saying, but at the very least, I’m glad that some important camp within crypto is still championing crypto virtues.