Bitcoin lenders may need to become more like traditional financial 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 stage of crypto credit growth will depend less on decentralized financial experimentation and more on standardization, transparency and risk management.
“The minute you start trying to explain how this all works, they say, ‘No… We’ll pay more. Don’t lose my money,'” Blume said, referring to institutional borrowers evaluating crypto lending products that become difficult to defend during periods of market stress.
The comments reflected a broader shift in crypto lending post-2022 following the collapses of Celsius, Voyager and BlockFi, when opaque leverage, aggressive remortgaging and weak risk controls triggered a broader industry-wide credit crisis. In the years since, many institutional borrowers have moved away from complex DeFi structures in favor of products focused on transparent custody, standardized contracts, and clearly identifiable counterparties.
Throughout 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, composability, and capital efficiency, institutions continue to prioritize predictability, legal accountability, and operational simplicity.
That tension was especially visible in the debate over remortgaging, the practice of reusing customer collateral to generate additional yield, which became one of the defining risks exposed during the 2022 credit crash.
“The most important thing to ask… is where your Bitcoin is stored,” said Adam Reeds, co-founder and CEO of Ledn.
Jay Patel, co-founder and CEO of Lygos Finance, said borrowers increasingly need to “underwrite the lender” themselves 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 oppose bitcoin, but because the operational complexity surrounding many DeFi systems remains difficult to justify to boards of directors, shareholders and risk committees.
At one point, Blume summed up the divide between crypto-native finance and institutional finance in a single observation.
“Our entire 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 lending no longer seems tied to making finance more decentralized. Instead, it may depend on convincing institutional borrowers that bitcoin-backed loans can behave predictably enough to resemble the traditional system they already trust.
