Bitcoin developers are again at odds over how the world’s oldest and largest blockchain should handle storing information on-chain, with a proposal to relax long-standing limits on the size of data held sparking fierce debate reminiscent of 2023’s battles over Ordinals.

The blockchain’s OP_RETURN feature allows people attach a small piece of extra data to a transaction It is often used for things like notes, timestamps or digital records. The proposed change, put forward by developer Peter Todd, would remove the 80-byte cap on such data, a limit originally designed to discourage spam and preserve the blockchain’s financial integrity.

Supporters argue the current limit is pointless because users are already bypassing it by using Taproot transactions, to hide data inside parts of the transaction meant for cryptographic signatures. This is how Ordinals and Inscriptions work (and why they have their critics): They embed images or text into Taproot transactions that are often unspendable, turning the Bitcoin blockchain into a kind of data storage system.

Bitcoin Core developer Luke Dashjr, a vocal critic of Ordinals, which he has long labeled a “spam attack” on the blockchain, called the proposal “utter insanity” and warned that loosening data restrictions would accelerate what he sees as the degradation of Bitcoin’s financial-first purpose.

“It should be needless to say, but this idea is utter insanity,” Dashjr posted. “The bugs should be fixed, not the abuse embraced.”

Critics of the proposal also have another concern. The change could normalize illegal content storage, degrade the chain’s fungibility, and turn node operators into unwitting hosts of malware and copyright violations.

To demonstrate the potential maelstrom this may bring, one Ordinals team inscribed a whole Nintendo 64 emulator onto the blockchain, which may get the attention of Nintendo, a company known for being protective of its intellectual property.

Supporters of the change, including Pieter Wuille and Sjors Provoost, argued that relaxing OP_RETURN limits may actually reduce what’s known as UTXO (unspent transaction output) bloat, a phenomenon that slows down the blockchain when the network gets cluttered with non-financial transactions, and mempool fragmentation.

UTXO bloat is a documented side effect of Ordinals and Inscriptions using Taproot transactions. For example, in May 2023, at the height of Ordinals’ popularity, the Bitcoin blockchain became so congested Binance had to suspend bitcoin (BTC) withdrawals for a number of hours.

“The demand exists,” Wuille wrote. “And pushing it outside the public relay network only causes greater harm.”

For now, the proposal remains under review. One thing is for certain: The intensity of debate on GitHub and blockchain developer mailing lists shows the battle for Bitcoin’s identity is far from over.

Bitcoin (BTC), the world’s largest digital asset by market value, recently held steady as President Donald Trump’s trade war spurred a shift away from U.S. assets.

The so-called decoupling reinforced the belief of crypto advocates that BTC is as a safe haven and a low-beta play relative to equities.

BlackRock’s Head of Digital Assets, Robert Mitchinik, believes the cryptocurrency could actually evolve into a permanent low-beta play reflexively.

«It makes no fundamental sense, and yet when it’s repeated enough, it can actually become a little self-fulfilling, right?» Mitchnik said during a panel discussion at the Dubai Token2049 conference on Wednesday. «It is something that can happen reflexively because enough pundits and research outlets and other commentators have said that it would.»

Investors aggressively dumped the U.S. assets, including the tech-heavy Nasdaq index and the S&P 500, early this month as the escalating U.S.-China trade tensions spurred recession fears. BTC, however, held relatively steady, so much so that on a seven-day basis, the cryptocurrency looked less volatile than the S&P 500.

That short decoupling reinforced the crypto community’s belief in an asset known to be detached from the economic, political and monetary risk of a particular country, spurring renewed capital inflows into the U.S.-listed spot ETFs, Mitchnik explained.

Investors have poured in at least $3 billion in the spot ETFs in the last ten trading days, with BlackRock’s IBIT receiving the most inflows, according to data source Farside Investors.

Mitchinik added that part of the recent decoupling could be due to the transfer of BTC from the less stable hands to more long-term fundamental-driven holders. The shift is «definitely happening,» he said.

Jan van Eck, CEO of VanEck, while speaking at the same panel, said he would like to see bitcoin revert to the pre-2020 period when it was an uncorrelated asset.

The institutionalization of BTC after the Covid crash in 2020 and since the debut of ETFs early last year has led to the cryptocurrency developing correlations with tradfi assets, mainly the Nasdaq index. That has led to BTC losing its appeal as a portfolio diversifier.

Jan van Eck explained that traders would be inclined to hold more BTC if the correlations weaken.

UPDATE (April 30, 09:19 UTC): Adds ‘Reflexively» to headline.

BlackRock is preparing to bring blockchain to the back office of one of its largest funds, filing to offer a digital share class of its $150 billion Treasury Trust money market fund through BNY Mellon.

The new “DLT Shares,” short for distributed ledger technology, won’t hold crypto. BNY Mellon, the fund’s exclusive distributor, intends to use blockchain to mirror share ownership records, an incremental step that could pave the way for broader adoption of tokenized cash, digital assets, or blockchain-based settlement infrastructure in traditional finance.

In the past few years, a growing number of firms has experimented with creating blockchain-based representations of real world assets (RWAs), bringing the traditional finance world rapidly into the crypto and decentralized finance (DeFi) environment. Earlier Wednesday, Libre said it was tokenizing $500 million of messaging platform Telegram’s $2.4 billion debt and bringing it to the TON blockchain.

BlackRock’s Liquidity Treasury Trust Fund is part of the firm’s Liquidity Funds suite and managed over $150 billion in assets as of April 29. The DLT share class has a minimum investment requirement of $3 million for institutional buyers, with no minimums on subsequent purchases. The SEC filing is preliminary and subject to approval.

The move isn’t BlackRock’s first into tokenization. Its blockchain-native BUIDL fund, created in partnership with Securitize, now manages over $1.7 billion in assets and recently expanded onto Solana.

CEO Larry Fink has consistently emphasized his belief in the long-term potential of tokenization and decentralized finance. In his 2025 annual letter to shareholders, Fink warned that the U.S. risks ceding its financial dominance if it fails to control its debt — a vulnerability that could accelerate investor interest in alternatives like bitcoin (BTC).

“If the U.S. doesn’t get its debt under control … America risks losing [its reserve currency status] to digital assets like Bitcoin,” Fink wrote. “Decentralized finance is an extraordinary innovation. It makes markets faster, cheaper, and more transparent. Yet that same innovation could undermine America’s economic advantage.”

UPDATE (April 30, 7:29 UTC): Adds third paragraph on tokenization trends, rewrites headline.