Spot Bitcoin ETF Launch Raises Questions About the Likelihood of ‘Millions of Unbacked BTC’

The anticipated approval of a spot Bitcoin ETF exchange-traded fund (ETF) in the United States, currently priced at $43,010, is raising concerns about potential conflicts with the original vision of Bitcoin, as envisioned by its anonymous creator, Satoshi Nakamoto. According to Bitcoin analyst Josef Tetek from the hardware crypto wallet firm Trezor, the concept of a spot Bitcoin ETF, which essentially tracks BTC’s price by holding Bitcoin, goes against the fundamental principle of self-custody.

Spot Bitcoin ETF Launch Raises Questions About the Likelihood of ‘Millions of Unbacked BTC’

Tetek argues that the introduction of spot Bitcoin ETFs contradicts the essence of self-custody, where users take full responsibility for holding the private key or the actual assets. In an interview with Cointelegraph, he expressed his concerns, stating, ‘In principle, spot Bitcoin ETFs take people further from self-custody and potentially introduce a systemic risk, as ETFs will be safer on the surface than exchanges.’

The analyst highlights a potential consequence of spot Bitcoin ETF approval, suggesting that it could lead to the concentration of large quantities of BTC in central locations, making it susceptible to government seizure. Tetek draws parallels with historical events, pointing to the confiscation of gold in the United States during the 1930s as a potential scenario.

This development underscores the ongoing debate surrounding the impact of traditional financial instruments like ETFs on the decentralized and self-sovereign nature of cryptocurrencies, particularly Bitcoin, which has long been associated with the principles of individual ownership and control.

The result could be the creation of millions of unbacked Bitcoin, which would distort genuine markets and depress the value of real Bitcoin — all while handing greater agency to the giants of centralized, traditional finance. The very antithesis of Satoshi’s original vision.

Josef Tetek

Potential Dangers Loom as Spot Bitcoin ETF Hits the Market

Quantum Economics founder Mati Greenspan suggests that there isn’t a direct conflict between self-custody and spot Bitcoin ETFs. According to Greenspan, retail users are likely to continue opting for self-custody without being drawn towards Bitcoin ETFs.

Speaking to Cointelegraph, Greenspan stated, ‘Personally speaking, I would never buy any sort of paper IOU forms of Bitcoin, but that’s because I have the option of self-custody.‘ He emphasized that most institutions don’t have the luxury of this option.

Greenspan added, ‘There are zero advantages and plenty of disadvantages for retail investors to hold Bitcoin ETFs. Way better to just hold Bitcoin.’ In his view, maintaining direct ownership of Bitcoin is more advantageous for retail investors than opting for Bitcoin ETFs, given the drawbacks associated with the latter.