In the investing world, the way these ETFs are being setup is very common as to how REITs, shares, index funds etc are all setup and have operated for decades. You buy shares in this Bitcoin ETF and they'll buy real bitcoin and (in most cases) have Coinbase custody those real bitcoins for you. They won't loan them out or do anything else with them as far as we can tell (dodgy illegal stuff they or Coinbase might do not withstanding).

While this is a far cry from taking full self custody of your own bitcoin, it's the norm in the investing world and opens up a lot of new institutional investors to quickly and easily buy bitcoin whereas before they couldn't.

Is an ETF still and IOU? Absolutely. But at least now with bitcoin these companies or individuals CAN go and take full self custody if they so chose to. Try doing that with $1,000 worth of Apple shares or a government bond and see how far you get...

This OPTION to self custody should hopefully also mean that it keeps things in check as if BlackRock etc do screw around everyone should theoretically just transition to self custody to take them out of the picture. Heck, even if they perform fine this still might happen over time as everyone realizes that paying them 1-2% p.a. is ridiculous when they can just self custody themselves and save a bomb.