TL;DR
- Don Wilson says public blockchains conflict with institutional trading and risk management.
- Banks build private networks to protect trading strategies and maintain fiduciary duty.
- Front-running risks on open ledgers make public chains unsuitable for large money managers.
The argument for public blockchains has always carried a certain logic. Open ledgers. No single gatekeeper. Anyone can verify the transactions. For years, the pitch went that Wall Street would eventually see the value and plug in.
Don Wilson does not buy it. He runs DRW, a firm that has traded crypto since 2014. At a conference in New York, he laid out why institutions are building their own private networks instead of using the public ones that already exist.
His reasoning comes down to one word: transparency.
A public blockchain shows every trade. That is the point. But for a money manager, publishing each move is not a feature. It is a liability. If a fund starts selling a large position, the first trades appear on the ledger. Other traders see the activity. They can front-run the remaining orders. The fund ends up paying a higher price to sell the rest.
Wilson called that a failure of fiduciary duty
He is describing a practical problem. Fiduciary duty means the manager must act in the client’s best interest. Broadcasting the strategy in real time works against that interest.
So the banks have gone another way. JPMorgan built its own private blockchain. Other firms have done the same. They use the technology but control who sees the data. They decide who gets to validate transactions. They keep the parts that improve efficiency and discard the parts that create risk.
The crypto industry has spent years waiting for institutions to adopt Ethereum or similar networks. The idea was that decentralized finance would merge with traditional finance. But the merger has not happened. What has happened is that banks took the technology and built walls around it.
Wilson sees opportunity in tokenization
Moving stocks, bonds, and other assets onto blockchain systems makes sense. Settlement times drop. Operational costs go down. But he does not see those assets living on public chains. He expects private or permissioned systems to handle the volume.
A public chain offers transparency to everyone. A private chain offers transparency to a selected group. For a bank, the second option is the only one that fits the regulatory and competitive environment.
Wilson acknowledged that his view is not the popular one. He said people think he is crazy. Maybe he is wrong, he added. But the evidence so far leans in his direction.
Look at the past ten years. Public blockchains grew. They attracted developers, users, and speculative capital. Wall Street watched. But when it came time to deploy real capital, the banks did not join those networks. They built their own. They used the underlying technology but stripped out the parts that conflicted with their business model.
The front-running problem is not theoretical
On public chains, miners or validators can reorder transactions. That ability is built into the protocol. In traditional markets, that behavior is illegal. A bank cannot accept a system where transaction ordering is decided by a race between bots.
If large asset managers start moving billions in real-world assets onto blockchains, the choice of network will shape how those markets operate. A public chain will make every trade visible. A private chain will keep them hidden.
The industry has spent years arguing that transparency is a virtue. For a trader managing client money, it is a vulnerability. Wilson’s comments capture that tension. The technology is useful. The implementation has to match the use case.
They are rejecting the idea that they must use the public version. They are building what they need. And what they need is a system that looks less like a global experiment and more like a private market with controlled access.
That may not be the future many envisioned. But it is the one institutions are building right now.
