Opinion by: Eran Barak, CEO at Shielded Technologies
For more than a decade, crypto in the US has existed in a legal gray zone. Regulators have wavered between silence and sudden crackdowns, leaving developers, investors and institutions paralysed with doubt.
In 2025, this started to change. The SEC dropped its case against Binance, citing the need for more explicit rules. The Senate passed the GENIUS Act, introducing a federal framework for stablecoins. The odds of the CLARITY Act being signed into law are high.
Even the White House has shifted its stance, reversing guidance discouraging employers from adding crypto to retirement portfolios. An executive order now allows 401(k) allocations into digital assets — a signal that Washington no longer sees them as inherently risky but as a market-viable asset class. Institutions are paying attention.
Lawmakers may open the door, but institutions will remain hesitant unless infrastructure evolves in parallel, and blockchain will remain confined to retail-driven speculation.
Infrastructure with other intentions
Today’s financial rules were drafted for a different era, and they struggle to adapt in this digital age. Blockchains were designed to promote trust and resist censorship through radical transparency, but this design now clashes with modern expectations around privacy, selective access and compliance.
This makes it difficult for most blockchains to comply with governance frameworks born of political processes or to handle the particular legal requirements of sectors like finance, healthcare or enterprise data management.
The European Union’s General Data Protection Regulation (GDPR), for example, gives users the right to be forgotten, yet data cannot be altered once published on blockchains.
The US Health Insurance Portability and Accountability Act (HIPPA) requires strict safeguards for health records, but no hospital can store patient data on a system where every access point is visible. Financial institutions, meanwhile, need selective disclosure — data shared with some parties but not all.
Markets where every transaction is fully transparent are inefficient, since fund movements can be tracked in real time and counterparties can trade against those signals.
Most blockchains aren’t ready for regulatory reality
For regulation to be meaningful, the systems it’s meant to govern have to be capable of compliance. That’s where the real gap lies today.
The promise of Web3 is control, privacy and ownership. The architecture, however, often turns those ideals into tradeoffs: private but incompatible with regulation, or open and transparent at the cost of compliance and user trust.
Related: Privacy will unlock blockchain’s business potential
This problem goes beyond transaction data. The metadata surrounding each transaction — who accessed it, when and under what conditions — can be as revealing as the data itself. Most chains ignore this layer, dangerously exposing developers and institutions when meeting compliance and audit standards.
This needs to change if we want blockchain to serve more than early adopters and retail use cases. In traditional markets like Nasdaq and the NYSE, about 80% of trading comes from institutions, while in crypto it’s almost the opposite, with retail still dominant.
Unless infrastructure adapts, new laws will only take crypto so far. Institutions may welcome the clarity, but they won’t commit meaningful capital until the systems they rely on meet regulated industries’ operational, legal and risk standards.
The path forward
Blockchain has shown that programmable assets and global settlement can work in practice. The challenge now is scaling them for institutional use. That means building infrastructure that can reconcile blockchain’s transparency with requirements for privacy, selective disclosure and compliance — making it possible to meet regulated industries’ legal and operational standards.
A decade ago, early cloud platforms faced similar security, auditability and compliance hurdles. It took years of engineering, standards-setting and iteration before those systems could support the world’s most risk-sensitive industries. Once they did, adoption followed, and blockchain now stands at the same threshold.
Thankfully, new frameworks are emerging. Zero-knowledge proofs, selective disclosure and novel tokenomic designs give developers the building blocks for privacy and compliance without reverting to centralized gatekeepers. These tools are coming into focus just as regulation is starting to get serious.
If the two evolve together, blockchain won’t just be a tool for speculation or fringe use cases.
It can become the trusted platform for the next generation of financial and data infrastructure, driving the global economy.
Opinion by: Eran Barak, CEO at Shielded Technologies.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.