Bitcoin lenders may need to become more like traditional finance firms, not less, if they want institutional capital to keep 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 finance experimentation and more on standardization, transparency, and risk management.

“The moment you start trying to explain how any of this stuff works, they’re just like, 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 post-2022 shift in crypto lending following the collapses of Celsius, Voyager, and BlockFi, when opaque leverage, aggressive rehypothecation, and weak risk controls triggered a wider credit crisis 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, composability, and capital efficiency, institutions continue to prioritize predictability, legal accountability, and operational simplicity.

That tension was especially visible in the discussion around rehypothecation, the practice of reusing customer collateral to generate additional yield, 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 borrowers increasingly need to “underwrite the lender” themselves before taking loans against their bitcoin holdings.

“The biggest point in my mind is definitely the rehypothecation 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, shareholders, and risk committees.

At one point, Blume distilled the divide 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 over fully autonomous financial systems.

For many lenders on stage, the future of crypto credit no longer appears tied to making finance 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.