Exchange-traded funds (ETFs) centered around Bitcoin have made it easier for traditional investors to enter the cryptocurrency space. However, Matěj Žák, the CEO of Trezor, emphasizes that owning shares of such funds is fundamentally distinct from possessing Bitcoin (BTC) directly.
In a recent interview on Oct. 29 with Sujal Jethwani on The Sujal Show, Žák described holdings in ETFs as “paper Bitcoin,” suggesting that investors achieve exposure to price fluctuations without truly controlling the actual cryptocurrency.
“It does not represent true Bitcoin ownership, as you do not hold the keys, lack access to the blockchain, and cannot spend it freely,” Žák explained.
He noted that investors in ETFs depend on their agreements with fund managers rather than maintaining Bitcoin’s private keys themselves.
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Trezor CEO advocates for Bitcoin self-storage
Žák contrasted ETF investments with self-storage, where individuals possess the private keys essential for accessing and moving their Bitcoin.
“Self-storage means holding the private keys, thereby ensuring genuine ownership of the assets; no one else can take them from you,” he remarked.
He pointed to the collapse of FTX in November 2022 as a cautionary example regarding the vulnerabilities of relying on centralized systems.
Once a major player in the cryptocurrency exchange world, FTX declared bankruptcy following a liquidity issue that revealed an $8 billion deficit. Its founder, Sam Bankman-Fried, received a 25-year sentence for fraud.
Žák also brought attention to the high fees associated with ETFs, contending that direct Bitcoin ownership eliminates ongoing management costs.
“Thus, we highly encourage individuals to take control of their coins themselves,” he noted.
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Recent breaches in cryptocurrency highlight custody concerns
His remarks are particularly relevant given the heightened anxiety surrounding cryptocurrency custody following multiple security breaches.
On September 24, Bitget announced illicit transfers of around $387 million from its hot wallets, as reported by The Block.
On October 9, hardware wallet manufacturer Ledger initiated an investigation into losses related to purchases made through the Southeast Asian reseller CryptoBilis.
This incident, initially estimated to involve losses of over $86 million, also raised concerns about vulnerabilities within hardware wallet supply chains.
Although self-storage mitigates dependence on centralized custodians, users must ensure the security of their recovery phrases and devices.