Opinion by: Nic Puckrin, CEO of Coin Bureau
The grand experiment in decentralization that commenced with Bitcoin is gradually being tamed; confined, labeled, and reestablished within the very systems it aimed to sidestep.
Wall Street’s frameworks and governmental regulations are transforming a peer-to-peer (P2P) financial network into a mere product offering. The pace of this transformation should alarm anyone who values the original principles, and it cannot be overlooked any longer.
For years, the establishment mocked Bitcoin… now it embraces it.
This transition is driven solely by profit. It manifests in the form of spot exchange-traded funds (ETFs) and other traditional finance (TradFi) mechanisms, turning cypherpunk money (and its values) into a revenue-generating machine for the largest asset managers.
Take the United States Bitcoin ETFs, which have attracted around $9 billion, illustrating that passive instruments (rather than wallets) are now the catalysts for growth. In the short term, this appears as validation, but in reality, it resembles a form of capture in the long run.
Wrappers, gatekeepers, chokepoints
Purchasing a share in a trust does not equate to owning a bearer asset; shareholders lack the keys… and thus, they lack claims. These claims are managed by a small number of custodians and market-makers, whose operational decisions effectively dictate policy for millions of investors.
When one company dominates custody for the majority of the sector’s spot-ETF assets, the network’s inherent censorship-resistance is practically outsourced to a singular compliance framework. Look at centralized exchanges (CEXs) like Coinbase, which now acts as a custodian for over 80% of US crypto ETF issuers.
This is how centralization unfolds transparently, where price discovery shifts from self-custodied markets to closing auctions. In the US, spot-Bitcoin ETFs now capture a significant portion of spot trading on active days.
Governance power shifts from users to attorneys through prospectuses, while risk transitions from numerous small operational domains (like wallets or nodes) to fewer, larger entities.
It begins without any malicious intent, merely the mathematics of convenience compounding over time. Consider Europe, where the Markets in Crypto-Assets (MiCA) regulation was marketed as a means of clarity — and, in many respects, it is — yet the stablecoin framework reveals an uncomfortable reality regarding cross-border fungibility and regulatory loopholes.
Branded tokens can navigate across jurisdictions with inconsistent reserve standards, allowing narratives that advocate “safety” to obscure a new, centralized reliance on policymakers to mend issues once they arise.
Related: Strategy adds $18M in Bitcoin on fifth anniversary of BTC strategy
Proponents of the ETF surge contend that this is the natural progression of every asset class, but Bitcoin stands alone; it serves as a settlement network with monetary characteristics.
It is not merely a line item to be rounded out, and as demand is funneled through products that explicitly inhibit self-custody, Bitcoin increasingly loses its role as a check on centralized power, becoming instead an adjunct to it. This trend undermines Bitcoin’s self-custody foundations, and “number go up” will never compensate for “rights go away.”
Make ETFs a bridge, not a cage
There is hope. A better path is accessible.
Envision the same influx of billions into wrappers, but integrated with a norm of self-custody. A scenario where brokers connect directly with wallets, institutions hold native assets and provide transparent proof-of-reserves (PoRs), and plan administrators default to multisig distributions.
This vision is not far-fetched. It could foster maturation that aligns with Bitcoin’s original values — scaling without compromise.
At present, Bitcoin is being reinterpreted for Wall Street in ways that optimize returns while minimizing interactions with outdated gatekeepers, who are no longer truly necessary.
When a singular ETF complex commands the majority of inflows, one custodian retains all keys, and one regulator rewrites the terms mid-cycle, decentralization dissolves. What remains in the remnants is a service-level agreement that essentially tames Bitcoin and undermines its foundational achievements.
The directive is straightforward: Treat ETFs as means of transition, not imprisonment. Flows should only be praised in headlines and by word-of-mouth if they support the infrastructure that enhances P2P liquidity and self-custody. Disclosures quantifying custodial concentration and censorship risks should be standard.
The current task is to free Bitcoin from the chains of TradFi’s domestication and, through polite (and persistent) efforts, liberate it from the centralization within the institutions it initially sought to surpass. The moment to authentically 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.