A fierce debate is unfolding on the coronary heart of Bitcoin’s mental core as business veterans conflict over the way forward for custody, sovereignty, and the function of ETFs in driving mainstream adoption.
The newest spark got here from investor Fred Krueger, who endorsed Nick Szabo’s name for a twin technique.
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ETFs Enter the Crossfire in Bitcoin’s Rising Self-Custody Debate
Krueger urges followers to undertake institutional rails, similar to banks and ETFs, whereas fiercely defending the precise to self-custody.
“Szabo is right,” Krueger wrote. “The answer is BOTH: welcome adoption by Banks, ETFs, and the greater establishment. And at the same time, encourage and practice self-custody. And defend the right to self-custody.”
His stance goals to bridge the widening divide between Bitcoin purists, who prize private sovereignty, and ETF defenders, who argue that scale requires conventional infrastructure.
The dialogue dates again to November 30, after Bram Kanstein argued that gold is so efficient at serving as cash that it has been changed by paper notes created from nothing.
Szabo responded with a historic clarification: gold’s centralization in vaults and its poor resistance to theft made trust-based options extra sensible for retailers and banks.
That centralization finally led to gold being partially changed by payments of change and telegraphic wire transfers.
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Szabo pressured that Bitcoin solves key weaknesses round pace and verification, however nonetheless lags in a single essential dimension: theft resistance.
“Bitcoin is, without further work and as most commonly used, still below the best trust-based methods in its theft resistance,” wrote Szabo.
This contributes to Wall Avenue’s desire for third-party custody.
ETFs vs. Self-Custody: A Philosophical Standoff
That context fueled a wider ideological rift. Bloomberg’s Eric Balchunas questioned why “snobby OGs” settle for exchanges holding Bitcoin however oppose ETFs. Balchunas argues that each depend on outsourced custody and that ETFs are “waaay cheaper and safer.”
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That’s how i’d view it. What I don’t perceive is why the snobby OG’s had been completely positive with crypto exchanges holding your bitcoin and never ETFs? It’s the identical outsourced custody idea, besides ETFs are waaay cheaper and safer.
— Eric Balchunas (@EricBalchunas) December 7, 2025
Analyst Sam Wouters countered sharply, noting that customers can withdraw to self-custody from an change at any time, in contrast to with an ETF.
“Snobby OGs love bitcoin as money that creates freedom. An ETF is a bird in a cage,” he wrote.
He argued that the worth of self-custody lies within the choice to exit, even when many customers don’t train it right now. With ETFs, he warned, that possibility disappears.
Nonetheless, Balchunas maintained that ETFs speed up adoption, unfold possession throughout hundreds of thousands, and assist Bitcoin mature right into a much less risky asset.
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Nonetheless, some push again that OGs don’t settle for cash being locked up below the management of companies simply because it will increase the quantity. Additionally they argue that ETFs threat giving establishments perceived affect over Bitcoin’s protocol route.
As the controversy escalated, Balchunas claimed self-custody is “a pain” and “very expensive” when purchased via exchanges. Nonetheless, left-wingers maintain that many platforms provide free withdrawals, low spreads, and no annual charges, in contrast to ETFs.
Balchunas insisted ETF issuers “don’t want power of protocol,” regardless of normal sentiment that companies can at all times be pressured.
“All I know is I got a ledger thing, then the app went out to source BTC, and it was 1.4% minimum to convert my $. Some were 2-3%. For an ETF person, that’s really expensive, worse than the 1970s,” he famous.
Nonetheless some maintain that Bitcoin exists as a result of traders can’t belief companies on their phrase.
With Bitcoin’s identification frequently being examined between sovereignty and scalability, the ETF–self-custody debate has transcended into greater than a disagreement. It’s now a defining fault line for the asset’s subsequent chapter.
