Potential spot bitcoin ETF approval excitement is building in the crypto ecosystem, but Arthur Hayes isn’t convinced such an event is good for bitcoin, or for the people who use it.
The crypto OG and Maelstrom Fund founder says institutional interest in bitcoin could “herald a situation that we might not actually like in the end.”
Speaking to Blockworks on the On the Margin podcast (Spotify/Apple), Hayes posits a hypothetical scenario: “Let’s say Larry Fink and his [traditional finance] ilk come in and hoover up a large percentage of the freely traded bitcoin [BTC] in circulation.”
The same institutional entities could launch bitcoin mining ETFs, he says, adding that “BlackRock is the largest shareholder of some of the largest mining operations.”
Asset managers like BlackRock are effectively “agents of the state,” Hayes cautions. “They act on what the state tells them to do.”
Hayes argues that if the state needs its citizens to “sit in the fiat banking system” in order to tax them via inflation to pay back ever-growing debts, it makes sense for institutional entities — who are, by nature, compliant with the state — to hold money in an ETF vehicle.
In such a system, Hayes argues, “You can’t actually use the bitcoin. It’s a financial asset. It’s not the actual bitcoin itself.”
“You had some fiat, you bought this derivative,” he explains. “The asset manager went and bought some bitcoin and they put it in a custodian and it sits there.”
“If the BlackRock ETF gets too big,” he warns, “it could actually kill bitcoin because it’s just a bunch of immovable bitcoin that’s just sitting there.”