The rise of Bitcoin ETFs and treasuries challenges self-custody norms, raising concerns over the principle “Not your keys, not your coins.”
Satoshi Nakamoto originally envisioned that Bitcoin exchange-traded funds (ETFs) and other institutional Bitcoin products may reshape the central crypto ethos.
According to on-chain data, Bitcoin self-custody has been consistently decreasing since January 2024, the same month in which Bitcoin spot ETFs were approved.
The creation of new Bitcoin addresses is slowing down after nearly 15 years of growth, and the number of active addresses has declined significantly from almost 1 million in January 2024 to approximately 650,000 in late June, a level that has not been observed since 2019.
Willy Woo, an analyst at X, stated that the growth rate of self-custody consumers has declined since spot ETFs became available.
The data indicates a significant behavioral change, as more investors choose institutional custody solutions such as ETFs over private portfolio management.
The trend is a natural consequence of Bitcoin’s integration into the traditional financial system, as more investors are entering the crypto space through BTC funds. However, for others, it represents a departure from the original purpose of Bitcoin and individual sovereignty.
“ETFs did not rob users from cold storage.” A community member on X wrote, “They unlocked the market for those who were previously confined by compliance walls.”
The introduction of spot Bitcoin ETFs by companies such as Grayscale, Fidelity, and BlackRock represented a significant milestone for Bitcoin.
The ETFs provided investors with regulated, institution-grade access to the cryptocurrency, eliminating the necessity of managing private keys, exchanges, or wallets. Additionally, the funds pledged secure custody, tax advantages, and the convenience of conventional brokerage platforms.
Market demand was robust from the outset. Around $50 billion in net inflows were observed in spot Bitcoin ETFs within the first 18 months, with BlackRock’s IBIT leading the field at $53 billion.
In a mere 200 trading days, IBIT had tripled its assets under management to $83 billion by July 18, 2025. It maintains more than 700,000 BTC, nearly 100,000 more than Fidelity’s FBTC.
According to Bloomberg analyst Eric Balchunas, IBIT achieved the $80 billion milestone in 374 days, surpassing the previous record of 1,814 days held by Vanguard’s VOO.
Increasing Institutional Adoption
Bitcoin ETFs are not the sole conventional entry point into BTC. In recent years, Bitcoin treasury companies, businesses, or investment vehicles that maintain Bitcoin on their balance sheets as a strategic reserve asset have expanded from a small number of high-conviction participants, such as Tesla and Strategy, to a more widespread institutional movement.
By the conclusion of Q2 2025, the number of public companies holding BTC had increased to 125, representing a 58% increase from the previous quarter.
BTC is currently held on the balance sheets of more than 250 organizations, including public corporations, private firms, ETFs, and pension funds, as of mid-2025.
Bitcoin treasury companies provide holders with an indirect method of investing in Bitcoin, eliminating the need to manage private keys or interact with crypto exchanges.
Like exchange-traded funds (ETFs), they eliminate the necessity for self-custody or direct interaction with cryptocurrency exchanges while offering institutional-grade custody and regulatory supervision.
