Bitcoin lenders may need to become more like traditional finance firms, not less, if they want institutional capital to continue flowing into the sector.
At Consensus 2026 in Miami, Alexander Blume, founder and CEO of institutional bitcoin lender Two Prime, argued that the next phase of crypto-credit growth will depend less on decentralized finance experimentation and more on standardization, transparency and risk management.
“The moment you start trying to explain how some of this works, they’re like, no… We’re paying more. Don’t lose my money,” Blume said, referring to institutional borrowers who rate crypto-lending products that become difficult to defend during periods of market stress.
The comments reflected a broader post-2022 shift in crypto lending following the collapses of Celsius, Voyager and BlockFi, as opaque leverage, aggressive remortgaging and weak risk controls triggered a wider credit crunch across the industry. In the years since, many institutional borrowers have moved away from complex DeFi structures in favor of products centered on transparent custody, standardized contracts and clearly identifiable counterparties.
Across the panel, speakers repeatedly suggested that institutional finance and crypto-native finance remain fundamentally misaligned in their approaches to risk. While DeFi evolved around permissionless access, compounding and capital efficiency, institutions continue to prioritize predictability, legal accountability and operational simplicity.
This tension was particularly visible in the discussion surrounding rehypothecation, the practice of recycling customer collateral to generate additional returns, which became one of the defining risks exposed during the 2022 lending collapse.
“The most important thing to ask… is where is your Bitcoin stored,” said Adam Reeds, co-founder and CEO of Ledn.
Jay Patel, co-founder and CEO of Lygos Finance, said that borrowers themselves increasingly need to “guarantee the lender” before taking out loans against their bitcoin holdings.
“The biggest point in my mind is definitely the remortgage piece,” Patel said.
Blume said institutional borrowers often reject crypto-native lending structures, not because they are against bitcoin, but because the operational complexity surrounding many DeFi systems remains difficult to justify to boards, shareholders and risk committees.
At one point, Blume distilled the distinction between crypto-native finance and institutional finance into a single observation.
“Our whole financial system is set up to have someone else to blame,” he said, arguing that institutional borrowers still prefer identifiable intermediaries, standardized processes and legal accountability to fully autonomous financial systems.
For many lenders on the scene, the future of crypto-credit no longer seems tied to making funding more decentralized. Instead, it may depend on convincing institutional borrowers that bitcoin-backed lending can behave predictably enough to resemble the traditional system they already trust.
