The new blockchain trilemma focuses on the relationship between products, customers, and regulatory approval, proposing that firms must choose any two of the three. In the past, the technology-centric trilemma presented the choice between decentralization, scalability, and security, where blockchains like Ethereum had strong decentralization and security but struggled with scalability. Technological advancements have made most blockchains meet users' needs in all three areas, termed as 'good enough'. A pivotal shift occurred with the approval of Bitcoin and Ethereum ETFs in the U.S. and new regulations in Europe, which highlighted the current landscape of firms in the digital asset space. Some companies have products and customers but lack regulatory approval, while others in regulated markets have products and approvals but lack customers. Mature financial institutions possess customer bases and regulatory processes but often lack diverse digital asset offerings. The key obstacles include regulatory distinctions regarding suitable offerings and cultural differences between financial entities and crypto-native firms. Ultimately, the market may evolve to accommodate various customer needs within a regulated environment, catering to both risk-tolerant users and conservative financial players.

Source 🔗