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Viewpoint by: Eran Barak, CEO at Shielded Technologies
For over a decade, cryptocurrency in the US has dwelled in a legal ambiguous area. Regulators have fluctuated between inaction and abrupt interventions, leaving creators, investors, and organizations frozen with uncertainty.
In 2025, this began to shift. The SEC dismissed its lawsuit against Binance, acknowledging the necessity for more definitive regulations. The Senate approved the GENIUS Act, establishing a national framework for stablecoins. The chances of the CLARITY Act being enacted are high.
Even the White House has altered its position, retracting guidance that discouraged employers from incorporating crypto into retirement plans. An executive order now permits 401(k) investments in digital assets — a signal that Washington no longer perceives them as fundamentally risky but as a viable asset class within the market. Organizations are taking notice.
While lawmakers may remove barriers, institutions will continue to be reluctant unless the infrastructure evolves simultaneously, and blockchain will remain limited to retail-driven speculation.
Infrastructure with alternative objectives
The current financial regulations were conceived for a different era, and they find it difficult to adapt to this digital epoch. Blockchains were developed to foster trust and oppose censorship through radical transparency, but this framework now conflicts with contemporary expectations surrounding privacy, selective access, and compliance.
This creates challenges for most blockchains to adhere to governance frameworks derived from political processes or to manage the specific legal demands of industries like finance, healthcare, or enterprise data management.
The European Union’s General Data Protection Regulation (GDPR), for instance, grants users the right to be forgotten, yet data cannot be modified once it has been published on blockchains.
The US Health Insurance Portability and Accountability Act (HIPPA) imposes strict protections for health records, yet no medical facility can keep patient information on a system where every access point is apparent. Financial institutions, on the other hand, require selective disclosure — sharing data with certain parties but not all.
Markets where every transaction is entirely transparent are inefficient, as fund movements can be monitored in real-time and counterparties can act based on those signals.
Most blockchains aren’t prepared for regulatory reality
For regulation to be effective, the systems it aims to govern must be capable of compliance. That’s where the significant gap exists today.
The promise of Web3 is control, privacy, and ownership. However, the architecture often forces those ideals into compromises: private but incompatible with regulation, or open and transparent at the expense of compliance and user confidence.
Related: Privacy will unlock blockchain’s business potential
This issue extends beyond transaction data. The metadata surrounding each transaction — who accessed it, when and under what circumstances — can be as revealing as the data itself. Most chains overlook this layer, dangerously exposing developers and institutions when meeting compliance and audit standards.
This must be addressed if we hope for blockchain to serve more than just early adopters and retail use cases. In traditional markets like Nasdaq and the NYSE, approximately 80% of transactions originate from institutions, whereas in crypto it’s nearly the reverse, with retail still predominant.
Unless infrastructure adapts, new regulations will only advance crypto to a certain point. Institutions may embrace the clarity, but they will refrain from investing significant capital until the systems they depend on satisfy operational, legal, and risk standards of regulated industries.
The way ahead
Blockchain has demonstrated that programmable assets and global settlement can function effectively. The present challenge is to scale them for institutional adoption. This involves constructing infrastructure that can balance blockchain’s transparency with needs for privacy, selective disclosure, and compliance — enabling regulated industries to meet their legal and operational requirements.
A decade ago, early cloud platforms encountered similar challenges regarding security, auditability, and compliance. It took years of engineering, establishing standards, and iteration before those systems could support the world’s most risk-sensitive sectors. Once they achieved that, adoption surged, and blockchain is now positioned at the same juncture.
Fortunately, new frameworks are emerging. Zero-knowledge proofs, selective disclosure, and innovative tokenomic designs offer developers the tools needed for privacy and compliance without reverting to centralized guardians. These innovations are becoming relevant just as regulation begins to intensify.
If both evolve in tandem, blockchain will not merely be a vehicle for speculation or niche applications.
It can transform into the reliable platform for the next generation of financial and data infrastructure, propelling the global economy.
Viewpoint by: Eran Barak, CEO at Shielded Technologies.
This article serves general informational purposes and is not intended to be, nor should it be interpreted as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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