- Vitalik Buterin warned that BlackRock's influence could push Ethereum in the wrong direction.
- Institutional pressure could lead to technical choices that exclude ordinary users.
- Ethereum needs to focus on being permissionless and censorship-resistant, he said.
Beware of BlackRock and its ilk.
If the world’s largest asset managers continue to accumulate Ether, Ethereum’s native cryptocurrency, at unprecedented rates, the network will face two key existential threats, according to Vitalik Buterin.
Buterin spoke at a panel at the Funding the Commons side event at Devconnect conference in Buenos Aires alongside computer scientist Roger Dingledine, who co-founded the privacy software Tor Project .
During the talk, attended by DL News, Buterin laid out how institutional capture could fundamentally break what makes Ethereum valuable.
“How do you avoid capture by big behemoths like BlackRock?” Dingledine asked Buterin, referencing the flood of institutional interest following BlackRock’s Ethereum ETF launch.
Buterin’s answer was blunt. Institutional influence creates two specific risks that could destroy Ethereum’s core purpose.
The nine Wall Street firms that offer Ethereum exchange-traded funds now hold over $18 billion in Ether, while treasury companies hold an additional $18 billion on their balance sheets.
Analysts, moreover, forecast that institutions could hold more than 10% of Ethereum’s entire supply in the near-term.
But Buterin sees danger in that type of success.
Indeed, since the arrival of Wall Street behemoths, Ethereum has faced a fundamental tension. Institutional money brings legitimacy and capital. But it also brings pressure to optimise for institutional needs — not the permissionless, censorship-resistant values that made Ethereum exciting to build on in the first place.
Threat one: driving people away
The first risk is pretty straightforward.
When BlackRock and other institutions gain too much influence, they alienate the people who actually care about decentralisation.
“It easily drives other people away,” Buterin said.
The core community and builders who spent years developing Ethereum’s infrastructure don’t want to build for Wall Street. They want to build transparent, permissionless systems, he explained.
If Ethereum becomes primarily a tool for institutional finance, those builders could get up and leave. And without them, Ethereum loses the technical expertise and ideological commitment that keeps it decentralised.
Threat two: wrong technical choices
There’s a second, more concrete, threat.
Institutional pressure leads to technical decisions that could break Ethereum’s accessibility.
“Their existence easily leads to the wrong kinds of choices on the base layer,” said Buterin, who offered up an example: 150-millisecond block times. Faster blocks sound great for high-frequency trading and institutional applications, but they create impossible constraints for ordinary users.
Worse, 150ms blocks make it “infeasible to operate a node unless you’re in NYC” — or another financial hub with ultra-low latency connections to validators.
The result is ghoulish for a community predicated on decentralisation and sticking it to the man. An Ethereum optimised for Wall Street becomes an Ethereum that only Wall Street can use.
That means geographic centralisation, exclusion of privacy-conscious users, and a node operator base limited to whoever can afford data centres located in Manhattan.
Short supply
In any case, Buterin offered a fix.
“We need to focus on the things that would otherwise be in short supply: global, permissionless, and censorship-resistant protocol,” he said.
Wall Street doesn’t need Ethereum to move fast or settle trades efficiently. It has systems for that. What Wall Street can’t build — and what makes Ethereum valuable — is a truly global system that anyone can access without permission nor trust.
Maintaining that requires a “strong core community that focuses on those things,” Buterin said.
Not a community optimised for institutional adoption, but one committed to the values that make Ethereum different from traditional finance.
Pedro Solimano is DL News’ Buenos Aires-based markets correspondent. Got a tip? Email him at psolimano@dlnews.com.
