Why Wall Street keeps crypto trades off-chain
Wall Street’s push into crypto is largely staying off public blockchains. Most large firms still route orders through traditional systems because onchain networks remain too slow and unpredictable, according to Annabelle Huang, chief executive of Altius Labs.
Interest from institutions is high. BlackRock’s spot Bitcoin ETF has posted record inflows in recent months. Fidelity and VanEck have launched similar funds. The Nasdaq has discussed expanding digital-asset trading infrastructure. However, trading, settlement and market-making by big players still run on private servers rather than open networks.
Huang points to performance and reliability as the main barriers. Firms expect stable throughput, consistent data access and systems that hold up under stress. Many chains slow or fail when activity spikes, and transaction fees can swing within seconds. Some layer-2 designs use optimistic methods that may require rolling back transactions, which weakens certainty. Speed is another gap: traditional markets measure latency in microseconds, while blockchain confirmations often take seconds or minutes.
ETFs let institutions get price exposure without touching onchain rails. To attract direct order flow, Huang argues blockchains need to meet the standards used in equities and derivatives. That means processing many trades at the same time with deterministic conflict resolution so results do not change order or break. It also means reducing input/output bottlenecks so storage and networking do not stall execution.
Compatibility is part of the ask. VM-agnostic, plug-in connectivity would let firms link existing trading tools without major code rewrites. Operators, she adds, should publish results from benchmarks run on real hardware with realistic payment, DeFi and high-volume trading workloads so performance claims can be verified.
Keeping activity off-chain has trade-offs. Liquidity concentrates in private venues and visibility into price formation is limited. Composability across applications is weaker when much of the market sits behind closed systems. Tokenized assets tied to real-world instruments may end up as static wrappers if onchain execution cannot support active markets.
Some firms are starting to build. Robinhood has announced plans for its own blockchain, aiming to shape infrastructure that fits its needs. For now, Huang’s view is straightforward: institutions treat crypto as an asset class but continue to operate on the infrastructure they trust until speed and certainty improve.
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