Ethereum co-founder Vitalik Buterin has issued a stark warning about the network's future, cautioning that Wall Street giants like BlackRock could fundamentally compromise the blockchain's core values if their Ether holdings continue to expand at current rates. Speaking at the Devconnect conference in Buenos Aires alongside Tor Project co-founder Roger Dingledine, Buterin laid out two specific threats that institutional dominance poses to the world's second-largest cryptocurrency network.
The remarks come as nine U.S.-listed Ethereum exchange-traded funds now collectively hold more than $18 billion in Ether, while corporate treasuries control an additional $18 billion on their balance sheets. Analysts forecast that institutions could soon hold more than 10% of Ethereum's entire circulating supply, which currently stands at approximately 120.7 million ETH.
During a panel at the Funding the Commons side event, Dingledine posed a question that many developers have quietly discussed in recent months: "How do you avoid capture by big behemoths like BlackRock?"
Buterin's response was direct. He argued that institutional influence creates two specific risks that could destroy what makes Ethereum valuable, potentially reshaping the network in ways its original builders never intended. The comments represent one of the most pointed public critiques from Ethereum's leadership regarding the rapid institutionalization of the crypto ecosystem since spot ETFs launched in the United States.
BlackRock's iShares Ethereum Trust, known by its ticker ETHA, has emerged as the dominant player in the ETH ETF market since its July 2024 launch. The fund has accumulated over $11 billion in net assets with cumulative net inflows exceeding $13 billion, making it one of the fastest-growing ETFs in U.S. history according to data from SoSoValue.
Threat One: Alienating Ethereum's Core Community
The first risk Buterin identified involves the potential exodus of builders and contributors who have spent years developing Ethereum's infrastructure.
"It easily drives other people away," Buterin stated during the panel, according to DL News, which attended the event.
The core community and developers who made Ethereum what it is today did not set out to build infrastructure for Wall Street. They sought to create transparent, permissionless systems that operate without centralized intermediaries. If Ethereum evolves primarily into a tool for institutional finance, Buterin warned, those builders could simply leave for other projects.
Losing that technical expertise and ideological commitment would weaken the innovation and decentralization that have supported Ethereum since its launch in 2015. The network's value proposition has always rested on its ability to enable applications that traditional financial infrastructure cannot support, from decentralized finance protocols to censorship-resistant platforms.
Threat Two: Technical Decisions That Centralize the Network
Beyond community dynamics, Buterin highlighted a more concrete danger: institutional pressure could drive technical decisions that fundamentally alter who can participate in the network.
"Their existence easily leads to the wrong kinds of choices on the base layer," he explained, offering a specific example that has been debated in developer circles.
Buterin pointed to proposals for 150-millisecond block times as the kind of change that institutions might favor. Faster blocks sound beneficial for high-frequency trading and institutional applications that require rapid settlement. However, such short block times create impossible constraints for ordinary users who want to run their own nodes.
With 150-millisecond blocks, it would become "infeasible to operate a node unless you're in NYC," Buterin argued, referring to the ultra-low latency connections required to keep pace with such rapid block production. Only those with data centers located in major financial hubs would be able to meaningfully participate in network validation.
The result would be geographic centralization around a handful of locations with the necessary infrastructure, excluding privacy-conscious users and independent operators worldwide. An Ethereum optimized for Wall Street would become an Ethereum that only Wall Street can effectively use.
Context: Ongoing Centralization Debates
Buterin's warning arrives against a backdrop of persistent concerns about concentration within the Ethereum ecosystem. The network has faced recurring debates about centralization risks from multiple angles over the past several years.
Lido Finance, the largest liquid staking protocol, previously controlled over 32% of all staked Ether at its peak, raising alarms about validator concentration. While that share has declined to approximately 24.4% as competition has intensified, the episode illustrated how a single entity could accumulate influence over network security.
Buterin himself has long advocated for limits on staking concentration. He previously argued that no single protocol should hold a majority of staked Ether, noting that such dominance combined with any governance structure represents a potential centralization risk.
The arrival of spot ETH ETFs has introduced a new dimension to these concerns. Unlike staking protocols where at least the underlying infrastructure remains on-chain, ETF holdings place Ether under the custody of traditional financial institutions operating within the existing regulatory framework.
The Path Forward: Protecting What Wall Street Cannot Build
Despite the risks he outlined, Buterin offered a clear prescription for how the Ethereum community should respond to growing institutional interest.
"We need to focus on the things that would otherwise be in short supply: global, permissionless, and censorship-resistant protocol," he stated.
His argument rests on understanding what institutions actually need from Ethereum versus what they can already obtain through existing systems. Wall Street does not require Ethereum for speed or efficient trade settlement. Traditional markets already have infrastructure for those functions.
What Wall Street cannot build, and what makes Ethereum genuinely valuable, is a truly global system that anyone can access without permission or trust in intermediaries. Maintaining that capability requires a "strong core community that focuses on those things," according to Buterin.
The emphasis should not be on optimizing for institutional adoption at the expense of the characteristics that differentiate Ethereum from traditional financial infrastructure. Rather, the community should continue building systems that serve users who cannot access existing financial services or who require censorship resistance.
Market Dynamics and Institutional Momentum
The challenge Buterin identified is complicated by the powerful market forces driving institutional adoption. Spot Ethereum ETFs have seen substantial inflows throughout 2025, with the nine U.S.-listed funds recording some of their strongest momentum since their launch in July 2024.
BlackRock's ETHA has been particularly dominant. The fund reached $10 billion in assets under management in less than a year, with its assets doubling from $5 billion to $10 billion in just 10 days according to Bloomberg ETF analyst Eric Balchunas. This makes it among the fastest-growing ETFs in U.S. history across any asset class.
The firm is also seeking to expand its Ethereum offerings. BlackRock recently filed to launch a staked Ethereum ETF that would allow investors to earn staking yield through the fund, potentially making the product even more attractive to income-focused institutional investors.
Corporate treasury adoption has provided additional momentum. Companies ranging from crypto-native firms to traditional businesses have begun holding Ether on their balance sheets, following a trend established by corporate Bitcoin purchases in previous years. Standard Chartered Bank has projected that institutional holdings could reach 10% of total ETH supply by 2026.
Devconnect Buenos Aires: Broader Themes
Buterin's comments on institutional capture were part of a broader series of remarks at the week-long Devconnect conference, where he addressed multiple aspects of Ethereum's future direction.
In separate sessions, he advocated for "ossification" of Ethereum's base layer, arguing that the protocol should increasingly lock down core features to prevent changes that could introduce bugs or instability. He also urged the community to accelerate migration to quantum-resistant cryptography, warning that quantum computers could potentially break current encryption methods before the 2028 U.S. presidential election.
The various themes share a common thread: protecting Ethereum's fundamental security and accessibility as external pressures mount. Whether from institutional interests seeking to optimize the network for their needs or future technological threats, Buterin is advocating for a defensive posture that prioritizes long-term resilience over short-term optimization.
Final thoughts
The tension Buterin described presents a genuine dilemma for the Ethereum ecosystem. Institutional capital has brought legitimacy, liquidity, and price support. The approval of spot ETFs was widely celebrated as validation of Ethereum's maturity as an asset class.
Yet that same institutional interest creates pressure to shape the network in ways that may not serve all users equally. The developers and users who valued Ethereum precisely because it operated outside traditional financial systems may find themselves increasingly at odds with investors who view it simply as another asset in a diversified portfolio.
For individual ETH holders and the broader community, the question becomes whether they can maintain the characteristics that made Ethereum valuable in the first place while also benefiting from institutional adoption. Buterin's message suggests that achieving both will require active effort and deliberate choices about which trade-offs to accept.
The coming years will likely determine whether Ethereum can thread this needle or whether institutional dominance will reshape the network in ways that its original builders would not recognize.