The landscape of cryptocurrency is witnessing a significant shift as major fintech firms like Robinhood and Stripe embark on constructing their own proprietary blockchains. This development signals a critical movement towards institutional adoption of digital assets, a trend that many experts believe will accelerate in the near future.
Robinhood has announced plans to develop its own layer-2 blockchain aimed at facilitating tokenized stocks and real-world assets. Following suit, Stripe is introducing Tempo, a blockchain focused on enhancing payment solutions, developed in collaboration with Paradigm. Annabelle Huang, co-founder of Altius Labs, emphasized the significance of these initiatives, predicting they will pave the way for numerous other fintech firms to explore similar ventures.
Huang has extensive experience in the intersection of cryptocurrency and traditional finance. After beginning her career trading forex in New York, she became a key player at Amber Group, aiding its ascent as one of Asia’s leading crypto liquidity providers during the decentralized finance boom.
Despite optimism surrounding these new blockchain projects, they are set to confront long-standing performance challenges that have impeded the wider adoption of cryptocurrencies. Traditional financial systems excel at extremely fast transaction processing speeds, often in microseconds, while blockchains typically handle transactions over a longer duration—seconds or, in optimal situations, milliseconds. Huang referred to this as the “execution bottleneck,” a critical barrier that must be overcome for fintech-created blockchains to earn the trust of institutional investors.
To address these challenges, Huang and her team at Altius Labs are working on a modular execution layer designed to integrate seamlessly with existing blockchain infrastructures. This approach aims to enhance transactional throughput without requiring a complete overhaul of current systems. Huang articulated the goal of enabling blockchains to improve block execution times and throughput flexibly and effectively, helping bridge the performance divide between blockchain technology and traditional finance.
The stark contrast in performance standards was underscored by a recent event in which Nasdaq’s system managed to execute the closing auction for the annual Russell index reconstitution, processing 2.5 billion shares in under one second. In comparison, Ethereum struggles to handle about 15 transactions per second, with Solana improving but still not meeting institutional needs.
Amidst these performance challenges, there has been a notable uptick in institutional engagement with cryptocurrencies, albeit in indirect forms. Large investors have gained exposure through vehicles like exchange-traded funds (ETFs) or by incorporating digital assets into corporate treasuries. Companies such as Strategy (formerly MicroStrategy) have leveraged this trend, becoming de facto proxies for Bitcoin investments. However, this strategy isn’t foolproof, as evidenced by some firms facing challenges when dipping into “Bitcoin treasury” narratives to attract investors, with their stock prices fluctuating considerably.
Huang cautioned that not all corporate approaches to Bitcoin are created equal, and the rising interest in ETFs and treasury strategies may persist as a viable option for institutional players. She noted the distinct advantages that established entities like MicroStrategy have over new market entrants, including lower average cost bases due to earlier acquisitions and innovative fundraising methods.
As fintech firms like Robinhood and Stripe advance towards creating their own blockchains, they are setting the stage for a new phase of institutional commitment to digital assets. This move goes beyond merely offering cryptocurrency trading options; these firms are embedding cryptocurrency into their core structures, which could fundamentally transform the financial services landscape.
Additionally, the infrastructure surrounding cryptocurrency is evolving, with over-the-counter (OTC) desks transitioning into regulated liquidity providers that meet the compliance and settlement standards expected by institutional clients. This evolution signifies a crucial step toward integrating crypto into traditional financial frameworks.
Huang concluded that the trend of institutions exploring stablecoins and building dedicated blockchains for specific applications is not only a continuation of discussions from years past but is now becoming a reality as these institutions are more prepared than ever to take action.
