Wall Street firms may embrace blockchain technology, just not in its current form. The open, distributed ledger visible to all participants is at odds with the way traditional finance works, said Don Wilson, founder and CEO of DRW, a TradFi trading firm that has been active in crypto for over a decade.
“There’s no world where institutions are going to say, ‘Oh yeah, just publish all my trades on the chain,'” Wilson said at the Digital Asset Summit in New York on Thursday. “Any money manager would consider it a breach of fiduciary duty to publish every trade they make to the world.”
Having every trade visible conflicts with how institutions manage risk and protect trading strategies, Wilson said. If an investor with a large stake in a company starts selling the stock, other market participants will be able to detect the pattern and the initial trades will have a “large price impact” on the investor’s later trades. In other words, transparency works against the trader.
“The problem is not the technology itself, but how it is implemented,” Wilson said. “I think it’s a mistake to put things on these chains that have complete transparency.”
Founded in 1992, DRW introduced Cumberland in 2014, one of the first institutional crypto trading desks, like bitcoin markets began to take shape. That early entry gave the firm a front-row seat to how digital assets evolved from niche markets to infrastructure that banks are now studying.
Wilson’s current focus reflects this shift. He pointed to efforts to bring traditional assets onchain and cautioned against doing so on fully transparent networks.
Ethereum has long been touted as the blockchain most likely to join Wall Street, with developers touting its large decentralized finance (DeFi) ecosystem and role in early tokenization efforts.
But like Bitcoin, all transactions are visible, and big banks have taken a different path. Many have spent years building or supporting private, approved networks, arguing that financial institutions need tighter controls over data, access and compliance. Firms such as JPMorgan, the largest US bank by assets, have developed internal systems, while others have supported platforms designed to limit who can see and validate transactions.
Wilson argued for systems that limit visibility. “Privacy is kind of at the top of the list,” he said, describing the features needed for institutional adoption. He also mentioned market structure issues as front running. “This ability for people to reorder transactions … it’s just not suitable for financial markets.”
His comments come as tokenization gains traction in the industry. Banks and asset managers are testing ways to move stocks, bonds and other assets onto blockchain-based systems. Wilson agrees that the opportunity is great, especially for larger asset classes. But he expects the design to look different from today’s public chains.
“I think it’s obvious that’s not going to happen,” he said, referring to the idea that institutions will adopt fully transparent systems. “Everybody thinks I’m crazy … so I don’t know. Maybe I’m wrong. We’ll see.”
