The crypto industry stands out from other sectors for a variety of reasons. One of the main distinctions between crypto and mainstream tech or the auto industry, for instance, is the elimination of centralized, trusted authorities. Decentralized finance (DeFi) is a crucial aspect of crypto and blockchain, making it an integral part of Web 3.0.

As traditional financial institutions, which are the antithesis of decentralized organizations, show interest in crypto and DeFi, the industry is at a crossroads. Some industry voices see this as a tremendous opportunity for growth and compromise, while others, known as decentralization purists or “degens,” take a more hardline stance.

However, with traditional finance and centralized entities entering the Web 3.0 space, how can the industry maintain its growth while upholding its core principles?

The key lies in collaboration rather than isolation. Although partnerships between blockchain protocols or Web 3.0 organizations and mainstream finance or other centralized entities may give rise to reservations on both sides, finding common ground is essential. Even though two entities may differ fundamentally on most matters, they can still work together for mutual benefit.

Take, for example, the United States and China, two global superpowers with economic, political, and ideological rivalries. Despite their differences, they collaborate in areas that serve their national interests. Similarly, the Web 3.0 movement must recognize that its ultimate goal is to promote growth and adoption. To achieve this, the industry needs to expand into new territories and form relationships with traditional finance and Web 2.0 organizations, as this approach offers the least resistance.

However, for this collaboration to happen, Web 3.0 must meet outside partners halfway, particularly in terms of legal compliance. Operating in a regulatory void is no longer feasible, as laws and standards govern our modern society. While bypassing rules may have worked when the industry was small and under the radar, it is no longer a viable option.

Since the crypto market surpassed $2 trillion in February 2024, some may argue that the industry has already proven itself and that working with outside organizations will undermine the Web 3.0 movement. However, this perspective is naive.

Web 3.0 is a collection of communities working together to influence change, much like a social movement. While each community has diverse voices and opinions, the end goal of mainstream adoption remains the ultimate objective, despite differing strategies for achieving it. Internal debates on how to accomplish this objective should be ongoing and strategic.

Working with outside organizations, particularly traditional finance, fintechs, and e-commerce, can be lucrative and mutually beneficial. Shunning centralized entities that drive innovation, remove regulatory barriers, and expand user bases is a missed opportunity. The potential added liquidity from these collaborations can’t be squandered. Furthermore, centralized entities have been operating within the Web 3.0 space for some time, and their presence has actually fueled the industry’s growth by making it easier for users to interact with digital assets.

Web 3.0 organizations, whether fully decentralized or not, owe it to the industry to seize partnership opportunities with outside organizations if there is a clear benefit. As TradFi and crypto players explore collaborations, Web 3.0 now has the leverage to shape the nature of these partnerships. The infrastructure and protocols of Web 3.0 are attracting outside players, and blockchain technology offers game-changing efficiency that entices Web 2.0 organizations and the financial world.

Cooperating with outside parties allows Web 3.0 to strengthen its legal standing and make compliance more efficient. Additionally, since the majority of users are still in the realm of traditional finance and Web 2.0, connecting with centralized entities now, rather than later, is crucial to achieve growth and accelerate adoption. By doing so, Web 3.0 can position itself strongly and transform its innovative ideas into everyday features for everyone.

Eitan Katz is the CEO and co-founder of Kima. Before Kima, Eitan held leadership roles at the IDF, HP, HPE, and BMC. He has built HP’s Global Innovation and Incubation program, led HPE’s Enterprise Mobile platform, and has been a founder three times. He is also a founding member of Aegis, the first MPC-based Bitcoin wallet.