This is probably crazy conspiracy talk, I'm hoping folks smarter than me could tell me why this wouldn't happen.
BlackRock and other Bitcoin spot ETFs are using places like Coinbase to custody the bitcoin, right?
Let's fast-forward a few years and assume that a ton of US citizens have bitcoin ETF exposure and then let's assume hackers break into places like Coinbase and steal the bitcoin.
In this example, BlackRock could just say, "Sorry folks, your bitcoin is gone. Coinbase lost it, not us." BlackRock would be fine, but exchanges (and bitcoin) will have their reputations smashed.
"Never waste a good crisis"
If enough people are rugged, it's not a stretch to believe that policy makers will pass new laws to stop these kind of things from happening again. Of course, the right answer would be "self-custody." But, instead of pushing for self-custody (which would require changing laws and charters of large institutions) policy makers will, as usual, add rules to "fix" the problems.
Here are a few "fixes" I could see happening:
- Internet usage connected to a Digital ID - it would "stop the hackers from hacking"
- CBDC - it could be "FDIC insured" and if a hacker stole it, the US could just take it back
Sadly, neither of these things will help. Hackers will hack from countries that don't have Digital IDs and I think we all know how crap a CBDC would be.
My worry here is that spot bitcoin ETFs could be the very thing that cause a crisis big enough to pass draconian laws.
Luckily, those of us that self-custody will be fine (even if the value takes a hit for a while), but it'll suck to have to use Digital IDs and/or CBDCs.
Ok, please tell me this kind of thing wouldn't happen. Hopefully I'm missing something.