Trezor Executive: Putting All Bitcoin into ETFs Could Be the Worst Outcome for the Industry, Undermining the Core Principle of Self-Custody

Odaily Planet Daily News: Danny Sanders, Chief Business Officer of hardware wallet manufacturer Trezor, stated that "putting everything into ETFs" could be the worst development path for the Bitcoin ecosystem. Since the launch of the U.S. spot Bitcoin ETF in early 2024, cumulative inflows have exceeded $53 billion, becoming a significant force driving BTC prices. However, this could also alter the structure of how users hold their assets.

Sanders believes that over-reliance on ETFs will weaken the core principle of "self-custody" in Bitcoin, leading users to gradually delegate control of their assets to third-party institutions instead of holding their private keys themselves. While self-custody carries risks such as losing the seed phrase or private key leakage with no possibility of recovery, he considers it more of a psychological barrier than a technical challenge, adding that "it's not difficult once you actually start."

Data shows that out of approximately 600 million crypto users worldwide, only about 10% practice self-custody, and among them, only around 12 to 13 million users utilize hardware wallets.

As an early hardware wallet manufacturer in the industry, Trezor played a role in popularizing the BIP-39 seed phrase standard and continues to advocate for lowering the barriers to self-custody through improved user experience and educational tools, rather than relying on intermediary custody.

Sanders concluded that the industry's long-term goal should be to gradually approach a Web2-level user experience, rather than simply replacing self-custody with ETFs. "That [replacement] would probably be the worst possible outcome for the entire industry." (The Block)