Odaily reported that a16z Crypto published an explanation of why it invested in Digital Asset, framing institutional adoption of crypto around three historical barriers: blockchain performance, regulatory uncertainty, and privacy. According to a16z Crypto, the first two obstacles have made clear progress, leaving privacy as the central issue for institutions seeking to use crypto technology in financial markets.
Performance and regulatory hurdles have eased
a16z Crypto said blockchain performance was once a major limitation for institutional use of crypto technology, but that issue has now been largely resolved. In its view, L1 and L2 networks now provide the scale, speed, and complexity required by institutional users, giving on-chain systems the basic capacity needed for institutional-grade activity.
On regulation, a16z Crypto pointed to the U.S. GENIUS Act, which it said has taken effect and addressed regulatory uncertainty. With network performance and regulatory clarity both advancing, the firm described privacy as the remaining core challenge for institutions that want to bring financial activity on-chain.
Institutional transactions require selective disclosure
a16z Crypto noted that traditional public blockchains make transaction information public by default. That model supports verification, but it does not fully match the requirements of institutional financial transactions. Institutions need systems that support selective disclosure, compliance obligations, and collaboration among multiple parties, rather than exposing every detail of a transaction to all participants on the network.
The firm gave the example of banks conducting Treasury trades or repo transactions. In such cases, the two sides of the transaction need to share relevant information with each other, but they should not have to reveal positions, counterparties, or transaction size to the entire network. For that reason, a16z Crypto said privacy remains the core challenge for moving institutional activity on-chain. It contrasted many blockchain projects, which try to make institutions adapt to crypto systems, with Digital Asset’s approach of making crypto technology fit institutional requirements. In that framing, mature privacy technology becomes the key breakthrough for attracting institutions into the crypto market.