Banks and ETFs Dominate as Crypto Faces Regulatory Shift

- Banks and ETFs lead crypto's institutional takeover. - Regulation pushes decentralization ideals to the margins. On August 9, 2025, Cointelegraph reported that as regulators tighten their oversight, the crypto industry is shifting away from its cypherpunk roots. According to the report, this trend benefits established institutions like banks, exchange-traded funds (ETFs), and stablecoin issuers, while this growing institutional dominance marginalizes the original decentralization ethos that founded the crypto movement. Arthur Azizov, founder of B2 Ventures, emphasized that banks will accelerate this shift by integrating cryptocurrency operations into their existing frameworks. In addition, many banks plan to launch their own stablecoins once they receive regulatory clarity, a move that would allow them to leverage their established and loyal customer bases. As a result, these developments mark a significant change in how traditional financial systems adopt and use cryptocurrency. Governments facilitate this institutionalization by imposing stricter regulatory frameworks, including Anti-Money Laundering (AML) and Know-Your-Customer (KYC) requirements. Such measures aim to ensure compliance and attract technology companies and fintech startups to regulated markets. Authorities widely enforce AML and KYC regulations in the Asia-Pacific region and Europe, and the United States will likely follow similar trends. However, these regulations conflict with the core principles of decentralized finance (DeFi), such as permissionless access and censorship resistance, which were central to the original vision for decentralized cryptocurrencies. The report also highlighted tensions between the institutionalized crypto landscape and the cypherpunk community, which has historically championed a decentralized financial system free from intermediaries. Consequently, this shift creates challenges for smaller crypto startups that lack the resources to navigate the heavily regulated environment.