Institutions seek control and risk reduction, while cypherpunks push privacy, creating parallel paths that increasingly overlap.
Crypto’s next phase will not be a clear fight between freedom and control. According to Ethereum co-founder Vitalik Buterin, institutions and cypherpunks often move in parallel. More so, both groups sometimes work toward the same goals.
Buterin believes that governments and companies act on strategy rather than ideology. And to him, recognizing that reality matters for anyone building or using crypto.
Institutions Often Share Cypherpunk Security Goals, Buterin Says
In Buterin’s view, institutions act generally based on incentives rooted in control and defense. He referenced the game theory, which suggests that large organizations seek authority over internal systems. At the same time, these large bodies often resist outside interference.
And oftentimes, such priorities lead to strict internal policies on data handling, software use, and reliance on infrastructure. Many employees inside large firms understand surveillance risks better than the average user and have stronger mandates to act on those concerns.
But interestingly, that reality challenges a common assumption in crypto circles. Many in the crypto space view privacy-focused tools as niche. However, Buterin disagrees with this notion.
Top firms and even governments often place security and risk management over convenience in the pecking order. And this generally makes their internal standards stricter than what privacy maximalists advocate.
Looking ahead, Buterin expects institutions to rely less on external providers. He framed supply chains, cloud services, custodians, and software vendors as points of dependency.
Hence, both governments and companies will focus more on reducing those dependencies. Even at that, such shifts do not mean institutions will give users more freedom, as it remains the role of open-source communities.
Wallet Control and Independent Staking Expected to Rise Among Institutions
In the stablecoin sector, these forces show up in concrete ways. Issuers’ infrastructure choice is influenced by regulatory and geopolitical concerns atmosphere, as well as operational control.
Buterin describes several outcomes that may emerge as institutions and cypherpunks move in parallel:
- Stablecoin issuers in each region will favor blockchains controlled outside countries seen as political rivals.
- Governments will continue expanding KYC requirements for regulated assets and on-ramps.
- Non-KYC assets will persist, supported by growing demand for private transactions.
- Zero-knowledge proofs of fund origin will gain attention as a compliance compromise.
- Ideological disputes will intensify around where privacy limits should be drawn.
The co-founder noted that wallet control represents another key fault line as large organizations increasingly want to manage their own wallets. In fact, some plan to run independent Ethereum staking operations.
Such behavior could improve network decentralization by spreading validation power across more entities. From a protocol standpoint, that outcome strengthens resilience.
Buterin Says User Self-Custody Tools Remain a Cypherpunk Responsibility
Institutions rarely invest in tools that protect individuals from coercion, loss, or technical mistakes. As a result, secure self-custody for everyday users remains difficult.
Smart contract wallets and social recovery systems aim to address those risks. Buterin mentioned that the development of such tools remains the responsibility of cypherpunk builders rather than corporations.
Meanwhile, he reiterated that selective cooperation with traditional finance may help those alternatives grow. For example, decentralized stablecoins could see tighter pricing. However, this is contingent on professional traders running arbitrage strategies using centralized assets.
Furthermore, prediction markets could develop more quickly if financial firms use them to hedge existing risks. In such cases, a position taken by one party serves as insurance for the other.
