Opinion: Financial institutions want cryptocurrency lending to resemble traditional financial lending.

ME News Report, May 7 (UTC+8), at the Consensus 2026 conference, executives from institutional Bitcoin lending firms stated that after the 2022 crypto credit crisis, institutional borrowers are increasingly inclined toward transparent custody, standardized contracts, and clear risk management, rather than complex DeFi products. Alexander Blume, founder of Two Prime, pointed out that when explaining how DeFi works to institutions, they often say they would rather pay higher costs than take on the risk of losing funds. Ledn co-founder Adam Reeds emphasized that borrowers are most concerned about the storage location of their Bitcoin collateral. Jay Patel, co-founder of Lygos Finance, said that before taking out a Bitcoin-backed loan, borrowers need to conduct due diligence on the lending institution, especially focusing on re-hypothecation issues. Blume believes that the traditional financial system is built on the principle of “accountability,” with institutional borrowers preferring identifiable intermediaries, standardized processes, and legal accountability, rather than fully autonomous financial systems. The future growth of crypto lending may depend on whether institutions can be convinced that Bitcoin-backed loans can offer predictability similar to traditional finance. (Source: PANews)