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Legislating bitcoin purchases by the U.S. government might be exciting, but technical blockchain improvements remain essential for wider adoption.
Even as industry CEOs and U.S. legislators gather in Washington D.C. to advocate for the passage of the BITCOIN Act, better blockchain functionality and analytics remain essential for continued TradFi adoption of blockchain and tokenized assets. Specifically, Sen. Cynthia Lummis (R-WY) and Rep. Nick Begich (R-AK) continue to lead conversations and meetings related to the passage of legislation that would officially establish a federal bitcoin strategic reserve. Additionally, a goal that of this proposed legislation – that was not included in the executive order issued in March, would include a path for the U.S. to purchase 1 million bitcoins over a 5-year period These discussions, exciting as they may be, and as enthusiastic as the proponents might be, are only a component of the overall on-chain picture.
Recent announcements continue to highlight the fact that while tokenized assets generate headlines and social media conversation, blockchain utilization and adoption is the proverbial secret sauce to achieve wider adoption. One specific example that comes to mind is the recent guidance issued by the New York Department of Financial Services, which orders banks and other financial institutions to integrate blockchain analytics into compliance programs, which stated goal is to tighten oversight of digital assets. At the same time, even as fintech firms build blockchains to support the continued expansion of Wall Street firms into digital assets, execution speed for on-chain transactions continues to lag behind the pace that TradFi firms expect and require.
Let’s break down some of the ways these two blockchain related, but opposed, headlines, will influence the business and policy landscape moving forward.
The news that the NYDFS will now be mandating that banks will need to integrate blockchain analytics into compliance programs represents a significant step forward in the wider adoption of on-chain transactions and analytics within the financial system. Guidance such as this reflects not only the wider policy shift amongst regulators to a more pro-crypto stance, as well as the rapid deployment of tokenized assets by a wide range of financial institutions. To date, these products and services have been developed and deployed seeking to capitalize on the growing institutional investor demand for cryptoassets, so it makes sense that regulators are following these market trends.
This guidance from the NYDFS also mirrors the clarity in regulation that has emerged following the passage of the GENIUS Act, forward momentum provided by the finalization of the Frontier token from Wyoming, and the growing interest in stablecoins by TradFi institutions across the board. In any event the need for better analytics and transparency continues to drive proliferation of blockchain-based data analytics at financial firms.
Despite the advancements of institutional blockchain, and the deployment of Layer-2 solutions by firms such as Robinhood and Stripe the fact remains that in order to handle the sheer volume and scale of transactions the current disparities in performance must be addressed. A recent comparison based off of analyzing the Nasdaq closing auction for the annual Russell Index reconstitution illustrated just how much work remains. For contextual purposes, this reconstitution involves matching 2.5 billion shares in 0.871 second, with the INET system advertised to handle in excess of 1 million order messages per second, with a sub-40 microsecond latency.
Ethereum, by comparison, processes about 15 transactions per second with block times approximating 12 seconds. Even Solana, routinely cited as one of the fastest large-scale blockchain networks, operates with a 400-millisecond block time with the capacity to handle several thousand transactions per second. While certainly fast enough for retail traders and other non-institutional utilization, even the best blockchains (and even taking into account L2 solutions) are not currently up to the task of handling mass market volume.
This reality is why the innovations and efforts underway at fintech firms – like the development of proprietary blockchains at Robinhood and Stripe – hold such potential for attracting more institutional interest and investment.
Crypto continues to dominate the wider blockchain and tokenization conversations, and this is for good reason; crypto prices have been moving in and almost universally positive direction since the beginning of 2025. Products, services, and growing buy-in from institutions and policymakers have added fuel to this appetite. That said, and something that all investors and regulators should keep in mind is 1) blockchain improvements remain critical to continued adoption of cryptoassets, and 2) that significant work remains before blockchain becomes the backbone of financial market infrastructure.
