Bitcoin Lenders Say Institutions Seek TradFi-Style Crypto Credit

Executives from Two Prime, Ledn and Lygos Finance said institutional borrowers are increasingly seeking crypto credit products that resemble traditional finance practices. The comments came during a panel at Consensus 2026 in Miami on May 7, 2026. Speakers reported that institutions now focus on custody arrangements, transparency, standardized lending structures and clear risk controls after the crypto credit collapses of 2022.

Alexander Blume, founder and CEO of Two Prime, said institutions show little interest in complex decentralized finance mechanics once explanations become lengthy. “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. He added that borrowers often reject crypto-native structures because of operational complexity that is difficult to justify to boards, shareholders and risk committees. The panel reflected a broader industry shift since the 2022 failures of Celsius, Voyager and BlockFi.

Those collapses were linked to opaque leverage, aggressive rehypothecation and weak risk controls that contributed to a wider credit crisis. In response, many institutional borrowers have moved toward products with transparent custody, standardized contracts and identifiable counterparties.

Adam Reeds, co-founder and CEO of Ledn, emphasized the importance of knowing where collateral is held. “The most important thing to ask... is where is your Bitcoin stored,” Reeds said. Jay Patel, co-founder and CEO of Lygos Finance, stated that borrowers now need to underwrite the lender before taking loans against bitcoin holdings, with rehypothecation remaining a central concern.

Speakers noted a fundamental misalignment between institutional finance and crypto-native approaches. While DeFi developed around permissionless access, composability and capital efficiency, institutions continue to prioritize predictability, legal accountability and operational simplicity.

Blume observed that the traditional financial system is structured to provide identifiable parties responsible for outcomes. “Our whole financial system is set up to have someone else to blame,” Blume said. Panelists concluded that growth in bitcoin-backed credit may depend less on further decentralization and more on demonstrating that such lending can deliver predictable behavior and clear accountability similar to the existing financial system.