Wall Street’s Private Blockchain Push Risks a “Race to the Bottom,” Ethereum Advocate Warns

His comments come as major financial firms and blockchain companies develop their own networks designed specifically for institutional use.

Private Blockchains Create New Silos

Permissioned networks have gained momentum as traditional financial institutions look to bring assets and payments onchain while maintaining greater control over transactions.

Networks such as Canton, Circle’s ARC and Stripe’s Tempo are examples of infrastructure designed around institutional requirements such as privacy, controlled access and reduced counterparty risk.

Raman described the trend as a potential “consortium chain 2.0”, warning that competing private networks could eventually become isolated from one another.

“This is going to end up being a race to the bottom for consortium chains.”

The concern is that instead of creating a connected financial system, institutions could build multiple blockchain networks that operate independently and have limited interoperability.

Ethereum Advocates Favor an Open Base Layer

Etherealize is focused on bringing traditional financial institutions into the Ethereum ecosystem.

Raman believes Ethereum can serve as an open settlement and infrastructure layer while institutions build additional privacy and permissioning features on top.

He compared Ethereum’s role to HTTP, the basic protocol underpinning the internet, while describing permissioned privacy layers as comparable to HTTPS.

According to Raman, an open base layer can provide greater interoperability and liquidity because no single institution controls access to the underlying network.

He argued that permissioning can instead be implemented at the application or layer-2 level, allowing financial institutions to maintain the controls they require without abandoning an open blockchain foundation.

Wall Street Is Increasingly Interested in Private Networks

The debate comes as financial institutions increasingly explore blockchain-based infrastructure.

Private networks appeal to traditional finance because they can provide greater control over participants and transaction visibility.

However, Christian Catalini, founder of the MIT Cryptoeconomics Lab, said the industry's current phase is heavily focused on enterprise adoption and sales.

Catalini warned that networks with a clear sponsor or controlling organization could limit some of the competitive benefits originally associated with blockchain technology.

The question is therefore becoming less about whether Wall Street will use blockchain and more about what type of blockchain infrastructure institutions will ultimately adopt.

Blockchain Consortia Have Been Tried Before

The current push toward private networks is not entirely new.

Financial institutions previously explored consortium-based blockchain systems through initiatives such as R3’s Corda and the Hyperledger ecosystem.

Those earlier efforts attracted significant attention from banks and enterprise companies, although some major financial institutions later withdrew from R3's consortium.

The renewed interest in permissioned infrastructure suggests that institutional blockchain adoption may be entering another phase, this time supported by greater regulatory clarity and the growing tokenization of financial assets.

BlackRock’s Tokenized Funds Highlight the Debate

BlackRock has emerged as one of the major traditional financial institutions experimenting with tokenized assets on public blockchain infrastructure.

The asset manager previously launched BUIDL, a tokenized fund built on Ethereum, and has since expanded its blockchain-based product offerings.

Raman views BlackRock’s activity as evidence that institutional capital can move toward open blockchain networks when regulatory conditions become clearer.

He argues that public networks offer institutions access to infrastructure that is not controlled by a single consortium.

Ethereum Faces Competition From Institutional Networks

The growing number of private blockchain projects creates a strategic challenge for Ethereum and other public networks.

If banks and financial institutions increasingly choose vertically integrated or permissioned blockchains, liquidity and activity could become fragmented across multiple networks.

That could make it more difficult for assets and applications to interact seamlessly.

On the other hand, if institutions use private systems while maintaining connections to public settlement layers, blockchain adoption could develop in a more interoperable direction.

The distinction could become increasingly important as tokenized securities, stablecoins and other real-world assets move into mainstream financial markets.

The Bigger Question for Institutional Blockchain

The debate ultimately centers on openness versus control.

Permissioned networks can offer institutions privacy, compliance controls and clearly defined governance. Public blockchains, meanwhile, can provide open participation, broader liquidity and interoperability.

Raman believes the strongest model would combine both approaches: an open blockchain underneath with customizable permissioning and privacy features built above it.

As more financial institutions move assets and payments onchain, the competition between public blockchain infrastructure and private institutional networks could become one of the defining debates in the next stage of tokenization.

For Ethereum advocates like Raman, the goal is not to prevent institutions from using permissioned systems, but to ensure those systems remain connected to an open and interoperable financial base layer.