At the Devconnect developer conference in Buenos Aires on January 19, Ethereum co-founder Vitalik Buterin voiced growing concerns over the accelerating accumulation of Ethereum (ETH) by major institutional investors.
?️ Vitalik Buterin warns of @ethereum centralization risks from institutional ETH accumulation@VitalikButerin has raised concerns about growing institutional exposure to $ETH, including from giants like #BlackRock. He warned that large-scale accumulation could pose threats to… pic.twitter.com/yFmT9UcPpc
— Mpost Media Group (@mpost_io) November 20, 2025
Institutional Influence Poses Structural and Technical Risks
During his keynote session, Buterin highlighted two existential risks that could arise if large financial entities, such as BlackRock, the world’s largest asset manager , continue to increase their ETH holdings.
Erosion of Community Governance and Ethereum’s Decentralized Ethos
Buterin warned that a rising concentration of ETH among a small group of powerful institutions could marginalize Ethereum’s long-standing decentralization-focused developer community. While institutional inflows offer legitimacy and capital, he noted, they could also “reshape the network around Wall Street incentives,” diluting Ethereum’s foundational mission.
Pressure for Network Redesign Favoring High-Frequency Traders
Buterin also expressed concern about potential pressure to modify Ethereum’s technical architecture to benefit high-frequency trading institutions.
One proposal he cited involves reducing block times from several seconds to approximately 150 milliseconds, which is a change that would drastically increase the hardware requirements for node operations.
Such a shift would make running nodes prohibitively difficult for everyday users, concentrating node infrastructure in specific data centers and accelerating network centralization.
“A version of Ethereum optimized for Wall Street,” Buterin cautioned, “would ultimately be usable only by Wall Street,” contradicting the open, permissionless principles underpinning decentralized finance.
Institutional ETH Holdings Already Exceed USD 18 Billion
According to market estimates, major Wall Street firms, including BlackRock, collectively hold over USD 18 billion worth of ETH. BlackRock has also registered a new staking-enabled Ethereum ETF in Delaware, signaling intensifying involvement in the Ethereum ecosystem.
With institutional investors expected to soon hold more than 10% of the total ETH supply, Buterin’s comments serve as a strong warning to the market.
Call for Ossification of Ethereum’s Base Layer
As a safeguard, Buterin reiterated his advocacy for a deliberate “ossification” of Ethereum’s Layer-1 (L1) base layer. By making core specifications more resistant to change, Ethereum can shield itself from external pressures that could undermine decentralization.
Buterin emphasized that future innovation, including scalability upgrades and privacy enhancements, should primarily take place on Layer-2 (L2) solutions.
This approach would allow institutions to build high-performance systems on L2, while preserving the security and decentralization of the L1 base chain.
He concluded by stressing that Ethereum’s long-term resilience depends on prioritizing decentralization over short-term enterprise convenience, which is a message that underscores the ongoing importance of distributed governance in the crypto sector.
