The Day After the Bitcoin ETF

We won the battle. Now, let's remember why we're here.
Jan 11, 20242 min read

We've much heralded the coming of the Bitcoin ETF here at Bankless. I expect we'll do the same for the Ethereum ETF, which is bound to happen eventually.

That said, I wanted to give you a more sober "day after" take on the Bitcoin ETF and what it means.

Don't get me wrong. I'm celebrating the victory of the Bitcoin ETF today. The SEC should have done this years ago. Instead, by applying "arbitrary and capricious" anti-crypto logic, they stonewalled the Bitcoin ETF for over a decade, harming the very retail market they've sworn to protect through the existence of cash-bleeding pseudo-ETF products like Grayscale BTC.

They had the audacity to call this "protecting investors."

Now, it seems the only legacy for Gary Gensler is the absolute loss of legitimacy for the SEC, followed by court-ordered capitulation. What a waste.

Yes, retail should have a Bitcoin ETF. It's how your parents can add crypto exposure to their walled garden 401(k)s. Bitcoin wrapped in an ETF shell makes it work with brokerage accounts and financial advisors and institutional banks – where there's useful stuff in TradFi, we should use it. We should just remember this isn't banking 2.0 in a bankless money system – this is a weird hybrid – a "Banking 1.5."

Through this, we've also recruited a new ally. BlackRock and the banks can now sell crypto IOUs to the public. This is where we should be cautious.

There's no question that the pressure of bankers like Larry Fink dragged the SEC kicking and screaming toward approval. Despite the anti-bank posturing of politicians – the bankers have serious clout in DC. Wall Street gets what Wall Street wants. They see a market in crypto and they want products to sell. Regulators step aside.

This alliance between the bankers and crypto is a check on the powers of anti-market political powers like Gensler. It's driven by the simple profit incentive –  number go up! Thank god for number go up

But in this victory, we've sown the seeds for future conflict – this is an alliance of convenience. Who's side do you think the bankers will choose when it comes to privacy? The state or crypto? 

How about self-custody? Do you think they want people to hold their private keys and go bankless? 

Or what about DeF? Do you think they care if Elizabeth Warren's anti-crypto army bans DeFi front-ends? If DeFi starts eroding their margins, I expect they'd wholeheartedly support a ban. 

The bankers would rather sell bitcoin IOUs than bitcoin. What I'm saying is Wall Street is a fickle ally. Their allegiance to number go up will help us win some battles, but it won't help us win the war. 

Gensler was just a mini-boss. 

In the final boss fight – the one for a censorship-resistant money system by the people and for the people – the one against the totalitarian machine of the state and its corpo-tentacles – don't count on BlackRock to be on our side. 

Don't count on any of the banks. 

Are the bankers using us, or are we using the bankers? The answer is Yes. So, let's celebrate today and be cautious tomorrow. Let's remain uneasy allies. 

Remember: Not your keys, not your crypto. 

I'm not sure if we're in control of this trojan horse of an ETF – or if they are. My hope, as always, is that the algorithms will prevail. 

Code, not kings; bankless not BlackRock.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

Account Light mode Log Out