Crypto lending must adopt TradFi risk management to attract institutions

Industry leaders argue that the cryptocurrency lending market must prioritize risk management to consistently attract institutional capital, CoinDesk reported. At the Consensus 2026 conference in Miami, Two Prime CEO Alexander Blume stated that institutions are not rejecting crypto lending because they oppose Bitcoin, but because the complex operational processes are difficult to explain to boards and risk committees. He emphasized that the lending market should move closer to traditional finance rather than experimenting with DeFi. Panelists at the event also pointed out a persistent gap between the capital efficiency of DeFi and the predictability and legal accountability required by institutions. In particular, the practice of rehypothecation—using assets posted as collateral for one transaction as collateral for another—was highlighted as a key risk that contributed to the serial collapse of crypto lenders like Celsius in 2022. This has led to calls for borrowers to directly scrutinize the collateral management structures of their lending institutions.