The Protocol: Ethereum Foundation's high-profile departures spark fresh debate

Also: Citi on quantum computing and bitcoin, Jump Crypto’s Firedancer, and Vitalik Buterin on AI verification

What to know:

Welcome to The Protocol, CoinDesk's weekly wrap of the most important stories in cryptocurrency tech development. I’m Margaux Nijkerk, a reporter at CoinDesk.

In this issue:

• ‘What's happening at the EF?’ Ethereum community is looking for answers after high-profile departures
• Bitcoin faces outsized quantum threat as computing breakthroughs accelerate, Citi says
• Jump Crypto’s ‘Firedancer’ is taking a slow and steady approach to its long-awaited Solana infrastructure rollout
• Vitalik Buterin says AI 'formal verification' could actually make crypto much more secure

Network News

ETHEREUM COMMUNITY RESPONDS TO EF DEPARTURES: A wave of departures from the Ethereum Foundation (EF) is reigniting a debate inside the crypto industry: What is going on at the main steward behind Ethereum, and why does the community know so little about what is happening behind the scenes? Days after several high-profile figures said they had left the foundation during an internal shakeup, community members on X began openly questioning the organization’s direction, leadership structure and communication practices. “What’s happening at the EF?” crypto commentator Andy, the co-founder of the Rollup podcast, wrote in a post on X. Others echoed similar frustrations, arguing the EF has failed to clearly explain the rationale behind the changes or how responsibilities inside the organization are evolving. “Why can’t the EF just be transparent about things,” wrote Joon Ian Wong, a prominent figure in the crypto community events space. The criticism reflects a longstanding tension surrounding the Ethereum Foundation, the Switzerland-based nonprofit that plays a central role in funding research, coordinating upgrades and stewarding development of the world’s second-largest blockchain by market capitalization. Unlike traditional corporations, the EF has historically operated with a loose and decentralized structure. Some have argued that the model preserves Ethereum’s neutrality and prevents excessive concentration of power. Others say the approach has increasingly clashed with the expectations of an ecosystem now underpinning hundreds of billions of dollars in assets and decentralized financial activity. The latest departures appear to have reopened that debate. — Margaux Nijkerk Read more.

CITI SAYS BITCOIN PARTICULARLY EXPOSED TO QUANTUM THREATS: Quantum computing is emerging as a growing risk for digital assets, with Wall Street bank Citi (C) warning that recent breakthroughs are accelerating the timeline for potential threats to crypto security and internet infrastructure. In a report, the bank said advances in quantum computing are challenging the cryptographic systems underpinning cryptocurrencies, financial networks and online communications. "While large-scale quantum attacks remain a medium-term concern, the pace of progress has shortened the horizon and warrants closer attention from investors," wrote analyst Alex Saunders. Quantum computing is a long-term threat to crypto because a sufficiently powerful quantum computer could break the cryptographic systems that protect wallets, exchanges and blockchains, especially public-key cryptography like ECDSA used by Bitcoin and Ethereum. In theory, a quantum attacker could derive private keys from exposed public keys, forge transactions, and steal funds. Still, the risk is not immediate. Experts say the hardware needed to do this at scale is still years away, and blockchains will probably migrate to post-quantum cryptography before then. The analyst highlighted Bitcoin as particularly exposed because of its conservative governance model and slower ability to implement protocol upgrades. Saunders pointed to vulnerabilities tied to public keys exposed onchain, dormant wallets and early pay-to-public-key (P2PK) addresses, including wallets believed to belong to Bitcoin creator Satoshi Nakamoto. Latest estimates put around 6.5 million–6.9 million bitcoin at quantum risk due to already-exposed public keys. This is about one-third of circulating supply, or roughly $450 billion worth, depending on the BTC price. — Will Canny Read more.

JUMP CRYPTO’S FIREDANCER CLIENT: Jump Crypto’s long-awaited Firedancer validator client is now producing blocks on Solana mainnet, marking a turning point in the project’s yearslong push to overhaul the blockchain’s performance infrastructure. “Firedancer is live and running in production,” Firedancer founding engineer Ritchie Patel told CoinDesk in an interview. “We have packed tens of millions of transactions over the last few months.” The rollout, however, is intentionally restrained. Patel said the team preferred to roll out progressively across the network rather than through a broad public launch, as the team remains cautious about rapidly increasing adoption. “We don’t want everybody to run it yet,” Patel said. “If half the network upgrades before we’ve done full security audits, that would be a bit much.” Firedancer, developed by Jump Crypto, is a validator client for Solana, or another version of the software that runs the blockchain. The effort emerged partly in response to concerns around Solana’s earlier outages and its reliance on a single dominant client maintained by Solana infrastructure firm Anza. Rather than framing Firedancer as a competitor to Anza, Patel described the relationship as collaborative. — Margaux Nijkerk Read more.

BUTERIN ON AI FORMAL VERIFICATION AND CRYPTO: Vitalik Buterin says artificial intelligence could make cryptocurrency systems and critical internet infrastructure more secure if developers combine AI-generated code with mathematically verified software. The Ethereum co-founder argued that AI-assisted “formal verification” could become one of the most important tools for cybersecurity as increasingly advanced AI systems make it easier to discover software vulnerabilities, in a lengthy blog post shared. Formal verification refers to the use of machine-checkable mathematical proofs to confirm that software behaves exactly as intended. While the technique has existed for decades, Buterin said recent advances in AI are making it more practical by helping developers write both code and the proofs needed to verify it. Buterin framed the technology as a response to growing fears that AI could overwhelm defenders by accelerating bug discovery and cyberattacks. Smart contract exploits remain a persistent issue across crypto, with attackers frequently draining millions of dollars from vulnerable decentralized finance protocols. Mathematically verified software could help reverse that trend, especially in areas where security failures would be catastrophic, Buterin argued. He specifically pointed to Ethereum infrastructure, zero-knowledge proof systems, consensus mechanisms and post-quantum cryptography as technologies that could benefit from formal verification. — Margaux Nijkerk Read More.

In Other News

• Qivalis, a group of European banks building a regulated euro stablecoin, said Wednesday that 25 more lenders joined the initiative, more than tripling its membership as banks across the region deepen their push into blockchain finance. The expansion brings the consortium to 37 financial institutions spanning 15 European countries. New members include ABN AMRO, Rabobank, Intesa Sanpaolo, Nordea, Erste Group and National Bank of Greece. The expansion comes as tokenization gains traction among large financial institutions and asset managers, with stablecoins — crypto tokens whose value is pegged to a traditional asset such as a fiat currency — playing a key role in settlement and asset trades on blockchain rails. The effort also reflects a broader push by European banks to expand the use of euro-denominated stablecoins and reduce dominance of U.S. dollar-backed tokens, which currently account for about 99% of the global stablecoin market. The total stablecoin market capitalization is about $318 billion, dominated by Tether's USDT and Circle Internet's (CRCL) USDC. Together they account for more than 80% of the total. By building a regulated euro-based alternative, Qivalis aims to strengthen the single currency's role in digital payments and tokenized finance as blockchain settlement gains traction among institutions. "This infrastructure is essential if Europe is to compete in the global digital economy whilst preserving its strategic autonomy," said Howard Davies, chairman of Qivalis' supervisory board. — Kristzian Sandor Read more.
• Galaxy Digital said New York regulators granted the company a BitLicense and money transmitter license, allowing the crypto financial services firm to expand institutional digital asset operations in one of the industry’s most tightly regulated markets. The approval from the New York State Department of Financial Services authorizes GalaxyOne Prime NY, the company’s New York entity, to offer regulated crypto trading and custody services across the state. Galaxy said in a press release that the move gives New York-based institutions — including hedge funds, registered investment advisers and family offices — access to its digital asset platform, which the company said manages roughly $9 billion in client assets. “New York is home to the deepest pool of institutional capital in the country, and digital assets are no longer sitting at the edge of those allocations,” said Mike Novogratz, Galaxy's founder and CEO, in a statement. — Helene Braun Read more.

Regulatory and Policy

• U.S. President Donald Trump ordered the federal government to update its regulatory frameworks to integrate "digital assets and innovative technology into traditional financial services and payment systems" in an executive order. According to the document, the U.S. should foster financial technology services into its existing payment and financial services rails. "It is therefore the policy of the United States to streamline regulatory processes, reduce unnecessary barriers to entry, and encourage collaboration between fintech firms, federally regulated financial institutions, and Federal financial regulators," the order said. The order directed the heads of financial regulators to review their existing rules over the next three months and identify any rules or documents "that unduly impede fintech firms from entering into partnerships with federally regulated institutions." Within six months, Trump directed regulators to "take steps to encourage innovation as a result of the review." These steps include asking the Federal Reserve Board of Governors to review how it allows uninsured depository institutions and non-bank financial firms access to payment accounts and services. — Nikhilesh De Read more.
• U.S. Senator Elizabeth Warren is demanding the agency that regulates national banks explain its chartering of nine crypto-focused institutions, which, she argued, didn't meet federal regulations and posed a risk to the financial system. The U.S. Office of the Comptroller of the Currency has granted trust charters to a series of banks as the agency embraced President Donald Trump's agenda to elevate the crypto sector and establish a friendly regulatory environment. Now Warren, the ranking Democrat on the Senate Banking Committee, sent a letter to OCC chief Jonathan Gould, calling for an explanation of approvals for trusts belonging to companies including Coinbase, Paxos, Ripple, BitGo and Fidelity Digital Asset Services. "These companies are effectively crypto banks that want to evade the fundamental safeguards and obligations that come with being a bank," Warren, who has criticized Gould's decision previously in hearings, wrote in the letter. "Your decision to facilitate this regulatory arbitrage not only conflicts with federal law, it also poses serious risks to consumers, the safety and soundness of the banking system, and the separation of banking and commerce." — Jesse Hamilton Read more.

Calendar

• June 2-3, 2026: Proof of Talk, Paris
• June 4, 2026: Stable Summit, New York
• June 8-10, 2026: ETHConf, New York
• Sept. 16-17, 2026: Avalanche Summit, New York
• Sept. 29-Oct.1, 2026: Korea Blockchain Week, Seoul
• Oct. 7-8, 2026: Token2049, Singapore
• Nov. 3-6, 2026: Devcon, Mumbai
• Nov. 15-17, 2026: Solana Breakpoint, London

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