For the last decade, financial institutions have defaulted to closed, private blockchains for digital assets over open, permissionless systems. Many, if not most of the world’s biggest banks and financial institutions have invested in, and tested out digital assets on private, permissioned blockchain networks. None of them have achieved traction with customers, businesses or institutional investors.

A key argument that financial institutions have made for prioritizing these efforts over putting assets on public blockchains is that regulators and regulations strongly prefer, and in some cases, specifically require permissioned blockchains. I believe that time is coming to an end.

The “default” regulatory perspective is going to evolve much more over the coming years. Though it might be hard to see now, I believe we’re not far from a time when regulators will look on with suspicion not at putting assets on a public chain, but keeping them on private networks.

Three factors will drive this change.

Liquidity matters

First and most importantly, liquidity matters. Public networks like Ethereum have millions (soon billions) of users and will hold hundreds of billions (soon to be trillions) in capital. Digital assets trading on Ethereum get the benefit of all those customers with capital to invest. Like big, p

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Author: Paul Brody