To attract ongoing institutional investment, Bitcoin lenders might need to adopt more characteristics of traditional finance than less, according to experts in the field. During Consensus 2026 in Miami, Alexander Blume, CEO and founder of Two Prime—an institutional bitcoin lender—suggested that future crypto credit expansion will rely more on standardization, transparency, and risk management rather than decentralized finance innovation.
Blume highlighted that when trying to explain complex crypto lending products to institutional clients, the response often centers around security over cost. “The moment you start trying to explain how any of this stuff works, they’re just like, No… We’ll pay more. Don’t lose my money,” he noted, emphasizing concerns during market downturns.
This perspective aligns with a broader post-2022 trend in crypto lending after the collapse of platforms like Celsius, Voyager, and BlockFi. These events exposed weaknesses such as opaque leverage, aggressive rehypothecation, and inadequate risk controls, prompting institutions to favor transparent custody, standardized contracts, and clear counterparties.
Panelists at Consensus 2026 discussed how institutional and crypto-native finance diverge in their approach to risk. DeFi has prioritized permissionless access and capital efficiency while traditional finance emphasizes predictability and legal accountability.
The discussion highlighted rehypothecation as a critical issue revealed during the 2022 lending crisis, where customer collateral was reused for yield generation. Adam Reeds of Ledn stressed the importance of knowing where Bitcoin is stored, while Jay Patel from Lygos Finance mentioned borrowers need to scrutinize lenders before leveraging their bitcoin holdings.
Blume explained that institutional clients often reject DeFi structures not due to disinterest in Bitcoin but because they find it hard to justify complex systems to stakeholders like boards and shareholders. He summarized the divide by noting, “Our whole financial system is set up to have someone else to blame,” pointing out a preference for intermediaries with clear accountability.
Many lenders believe that the future of crypto credit will depend less on decentralization and more on demonstrating predictable behavior similar to traditional finance systems to gain institutional trust.