Major cryptocurrency market makers are increasingly abandoning public blockchains in favor of private trading venues to protect their proprietary strategies, according to industry analysts. The shift comes as firms seek to avoid exposing their trading playbooks on transparent ledgers, where every transaction is visible to competitors.
Public blockchains like Ethereum and Solana provide full visibility into trading activity, allowing rivals to reverse-engineer strategies. ‘You can see exactly when and how large players are moving funds,’ said a trading executive familiar with the matter who requested anonymity. ‘This level of transparency is unprecedented in traditional finance.’
The migration follows Wall Street’s historical pattern where high-frequency traders increasingly moved to dark pools and private exchanges. One startup, reportedly backed by former Citadel engineers, is building a private settlement layer that would allow institutions to trade crypto assets without revealing positions publicly.
Some regulators have expressed concerns about the potential impact on market fairness. ‘We need to strike a balance between innovation and maintaining transparent, liquid markets,’ said a European Central Bank official speaking on background. The trend could accelerate as institutional crypto adoption grows, potentially creating a two-tier market structure.