[Arthur Hayes warns: Financial institutions’ custody of Bitcoin could destroy it]

In the cryptocurrency world, while there is great anticipation for the approval of a Bitcoin spot ETF, Arthur Hayes has reservations about it, fearing that it may not be beneficial to Bitcoin and its users.

The cryptocurrency pioneer and founder of Maelstrom Fund pointed out in Blockworks’ “On the Margin” Podcast that the involvement of financial institutions may bring unpleasant results.

Hayes put forward this hypothetical scenario that highlights his concerns: "Imagine if Larry Fink and other traditional financial people started buying large amounts of Bitcoin in circulation."

He also pointed out that these financial giants may launch Bitcoin mining ETFs and that asset managers like BlackRock are in fact agents of the state and will act under the direction of the state.

Hayes believes that when the country needs to make citizens bear the growing debt through inflation taxes, it is reasonable for these financial institutions that are subject to state compliance to hold ETFs.

In the system he described, "You can't really use Bitcoin. It's just a financial asset, not Bitcoin itself."

He explained: “You buy derivatives with fiat currency, and asset managers buy Bitcoin and store it in a custodian. If the BlackRock ETF gets too big, it could destroy Bitcoin because it’s just a bunch of fossilized bits. coins."

In addition, he reminded that these institutions hold a large number of miners, which may increase their control over the Bitcoin network consensus mechanism.

Hayes said the upgrades needed to allow Bitcoin to maintain its status as a "solid cryptocurrency token asset" — particularly regarding encryption and privacy — may be at odds with the interests of traditional financial institutions.

"Will they support these upgrades? That's still unknown, but that's what can happen when you have these large passive investors," he questioned.

Hayes emphasized that Bitcoin exists for those who can freely transfer funds around the world, but if most of Bitcoin falls into the hands of certain institutions, the consequences are difficult to predict.

He acknowledged that widespread adoption of Bitcoin would undoubtedly drive up its price, but he questioned: “Is this really good for Bitcoin’s practical applications?"

Hayes believes that people need to think long-term: "Yes, ETFs have brought price increases, but what will be the consequences if all cryptocurrencies are concentrated in the hands of a few institutions?"