Intense debates are occurring among cryptocurrency industry veterans regarding the future of Bitcoin. This revolves around custody, sovereignty, and the role of ETFs in driving mainstream adoption.
The recent controversy was triggered by investor Fred Krueger supporting Nick Szabo's dual strategy proposal.
Bitcoin self-custody debate… ETF target
Krueger urges his followers to adopt institutional rails (such as banks and ETFs), while strongly asserting the need to protect the right to self-custody.
"Sabo is right," wrote Kruger. "The answer is both: welcome adoption by banks, ETFs, and the larger institutional framework. At the same time, encourage and practice self-custody and defend your rights."
His position aims to bridge the divide between Bitcoin purists who value individual sovereignty and ETF defenders who argue that traditional infrastructure is needed for scaling.
This discussion dates back to November 30, when Bram Kahnstein argued that gold was so effective it replaced paper currency created from nothing.
Sabo explained through history: due to the centralization of gold and its low resistance to theft, trust-based alternatives were more practical for merchants and banks.
This centralization ultimately resulted in gold being partially replaced by banknotes and telegraphic transfers.
Sabo emphasized that while Bitcoin has solved speed and verification issues, it still falls short in terms of theft prevention.
"Bitcoin is still under the best trust-based methods for theft prevention in the most common usage today," Sabo wrote.
This leads to a preference for third-party custody on Wall Street.
ETF vs. Self-Custody… Philosophical Opposition
This context has created a broader ideological rift. Bloomberg's Eric Valtchunas questioned why 'arrogant originals' accept exchanges that hold Bitcoin while opposing ETFs. Valtchunas argued that everyone relies on external custody and that ETFs are 'much cheaper and safer.'
Analyst Sam Wauters rebutted, pointing out that users can withdraw at any time with self-custody on exchanges, but this is not possible with ETFs.
"The arrogant originals love Bitcoin as money that creates freedom. ETFs are birds in a cage," he wrote.
He argued that the value of self-custody lies in the choice it provides, even if many users do not make withdrawals currently. That choice disappears with ETFs.
However, Valtchunas argued that ETFs accelerate adoption, distribute ownership to millions, and grow Bitcoin into a less volatile asset.
Still, some argue that OGs do not accept coins being tied under corporate control simply because their numbers have increased. They also warn that ETFs risk giving institutions influence over Bitcoin's protocol direction.
As the debate intensified, Valtchunas claimed that self-custody is 'cumbersome' and 'very expensive.' In contrast, many platforms emphasize free withdrawals, low spreads, and the absence of annual fees compared to ETFs.
Valtchunas claimed that ETF issuers do not want 'the power of the protocol,' but this differs from the general opinion that companies can always be pressured.
"I got a leisure device, and then the app went out to source BTC, needing at least 1.4% to convert my dollars. Some were 2-3%. For ETF users, that is really expensive and worse than the 1970s," he noted.
Still, some argue that Bitcoin exists because investors cannot trust what companies say.
As Bitcoin's identity is constantly tested between sovereignty and scalability, the ETF–self-custody debate has gone beyond mere differences of opinion. This debate has now become a dividing line that defines the next chapter of assets.
