Opinion by: Nic Puckrin, CEO of Coin Bureau
The grand decentralization experiment initiated by Bitcoin is gradually being domesticated; controlled, labeled, and relocated within the very framework it was designed to circumvent.
Wall Street’s wrappers and government regulations are transforming a peer-to-peer (P2P) monetary network into a product line. The rapid pace of this transformation should alarm anyone who values the original ethos, and it can no longer be overlooked.
For years, the establishment ridiculed Bitcoin…now it embraces it.
This transition is driven solely by financial incentives. It’s reflected in spot exchange-traded funds (ETFs) and other traditional finance (TradFi) channels as cypherpunk money (and its ethos) turns into a revenue generator for the largest asset managers.
Take the United States Bitcoin ETFs; they accumulated around $9 billion, demonstrating that passive wrappers (not wallets) are now fueling growth. In the short term, this seems like validation, but in reality, and over the long term, it resembles capture more closely.
Wrappers, gatekeepers, chokepoints
Owning a share of a trust doesn’t equate to acquiring a bearer asset, and since shareholders lack key control…they don’t hold actual claims. These claims are managed by a limited number of custodians and market-makers, whose operational decisions become de facto policy for millions of investors.
When one company dominates most of the sector’s spot-ETF custody, the network’s inherent censorship-resistance is effectively delegated to a single compliance program. Look to centralized exchanges (CEXs) like Coinbase, which now serves as a custodian for over 80% of US crypto ETF issuers.
This is how centralization becomes apparent, where price discovery shifts from self-custodied markets to closing auctions. In the US, spot-Bitcoin ETFs now command a significant portion of spot trading on active days.
Governance authority transitions from users to lawyers through prospectuses, while risk shifts from numerous small operational domains (such as wallets or nodes) to fewer, larger ones.
It doesn’t begin with ill intent, but rather the convenience of mathematics compounding over time. Consider Europe, where the Markets in Crypto-Assets (MiCA) regulation was promoted as clarity — and in many respects is — yet the stablecoin framework reveals a complicated truth about cross-border fungibility and regulatory arbitrage.
Recognizably branded tokens can move across jurisdictions with inconsistent reserve standards, allowing narratives that advocate “safety” to disguise a new, centralized reliance on regulators to address issues after scale is achieved.
Related: Strategy adds $18M in Bitcoin on the fifth anniversary of BTC strategy
Proponents of the ETF surge argue this is how every asset class matures, but Bitcoin is unique; it functions as a settlement network with monetary characteristics.
It’s not merely a line item to define, and as more demand is channeled through products that explicitly prevent self-custody, Bitcoin increasingly ceases to serve as a check on centralized power and instead becomes an extension of it. This trend undermines Bitcoin’s self-custody origins, and “number go up” will never justify “rights go away.”
Make ETFs a bridge, not a cage
Do not be disheartened. A better approach is possible.
Envision the billions of dollars flowing into wrappers, combined with a self-custody standard. One where brokers directly integrate with wallets, institutions maintain native assets and provide detailed proof-of-reserves (PoRs), and plan administrators prioritize multisig distributions.
This is not an unrealistic proposition. The outcome would reflect maturation aligned with Bitcoin’s original ethos — scaling without requiring surrender.
At present, Bitcoin is being reinterpreted for Wall Street in ways that optimize returns while reducing friction with obsolete gatekeepers who are no longer essential.
When a singular ETF complex dominates flows, a single custodian retains all the keys, and a sole regulator alters the conditions mid-cycle, decentralization dissipates. What remains in that aftermath is a service-level agreement that effectively domesticates Bitcoin and undermines everything it was designed to achieve.
The objective is straightforward: Treat ETFs as bridges, not cages. Flows should be celebrated in headlines and by word-of-mouth only if they support infrastructure that enhances P2P liquidity and self-custody. Disclosures quantifying custodial concentration and censorship risks should be provided by default.
The task at hand is to evade TradFi’s domestication and, respectfully (and tirelessly), liberate Bitcoin from centralization within the very institutions it sought to surpass. The moment to genuinely decentralize Bitcoin is now.
Opinion by: Nic Puckrin, CEO of Coin Bureau.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
