Crypto Lenders Emphasize Standardization in Bid for Institutional Trust

The crypto lending sector is undergoing a significant transformation as it seeks to regain investor trust and attract institutional capital. At a recent industry event, experts from leading lenders highlighted the need for standardization, transparency, and risk management in order to make bitcoin-backed lending more appealing to institutions.

According to Alexander Blume, founder and CEO of Two Prime, the next stage of crypto credit growth will depend on the ability to provide clear and understandable financial products that meet institutional requirements. This includes transparent custody, standardized contracts, and clearly identifiable counterparties.

The collapse of Celsius, Voyager, and BlockFi in 2022 exposed the risks associated with opaque leverage, aggressive rehypothecation, and weak risk controls. Since then, many institutional borrowers have moved away from complex decentralized finance structures and towards more traditional approaches.

As a result, lenders are now focusing on creating products that are more akin to traditional finance, rather than trying to replicate the decentralized finance (DeFi) models of the past. This shift is driven by the recognition that institutional investors prioritize predictability, legal accountability, and operational simplicity over complex DeFi structures.