Topic: Shower thought. Bitcoin ETF bad? (Read 662 times)

I don't see that people will consider this as a good start for Bitcoin most especially if the intention is to regulate its market price and being controlled by a group of people. Not actually wanted to be like but they want to remain its high volatility cause it gives us more profit than of having a stable price.
We could say that we are excited to see the effect of this in the market but I don't know if those results are highly acceptable to the community or just having regrets.

ETFs won't be censoring any transactions, though, because the investors won't have any access to the BTC to send it anywhere.  The sole purpose of an ETF is to hold some bitcoins in reserve and not move them.  People then place fiat bets on the price, never interacting directly with the bitcoins.

A very hypothetical scenario, yes, and I believe something that we should think about and debate/discuss about how Bitcoin could "fail". Because if the custodians could censor transactions, then Bitcoin, as what it's supposed to be as a censorship-resistant cryptocurrency, has therefore failed in my opinion.

A cartel of ETF issuers might be one of the paths to its failure.

I don't think I did initially, but I'm there now.  You're approaching it from the hypothetical scenario that a majority of Bitcoin users would be reliant on these companies and would then be restricted in their usage, correct?

From the perspective of someone who definitely wouldn't be reliant on those custodians, I'd feel a bit sorry for those "users" (technically, not really Bitcoin users), but that in and of itself wouldn't constitute a failure of Bitcoin (in my view anyway), as it's simply what those people opted to sign up for.  No responsibility and no control.  If that's what some people want, it's up to them.  If, however, it begins to impact those of us who aren't using those services, that I would perceive as a failure. 

If, for example, such a cartel claimed they had an economic majority and somehow managed to pressure developers into going down a certain developmental path or otherwise interfered with network governance, that's where I'd draw the line.  Provided the users who hold their own private keys are still free to transact in the way they want to, it's not a failure.

But you understand my viewpoint, I hope. The "custodians" could cartelize, and could censor the transactions they don't want, or maybe censor some transactions labeled "illegal" by the government.

It'll take a keener mind than mine to figure that out.  It's tricky enough keeping track of the "lost" bitcoins where people assume access to the private key has been lost, but it's still largely guesswork, as it may just be long-term HODLing.  I have coins that haven't moved in 5+ years, so do some people assume those coins are lost because they haven't moved in a while.  But I would assume that because some early adopters have vast tranches of BTC and are more likely to be of the "hold your own keys" mindset, there should still be a sizeable sum in the hands of individuals.

Plus, it's pretty well established that these third party custodians are shit at security and seldom manage to retain custody of their clients' BTC, meaning it usually ends up back in the hands of individuals anyway.   

How much from the total amount of the Bitcoins mined so far are moving around within the Bitcoin economy, and how much are stored in wallets and never moving, and how much of those "never moving Bitcoins" are held by third party custodians.

a few people above seem noobish about ETF regulation in regards to bitcoin.
here is a big hint. ETF regulation does not touch bitcoin.(though other regulations might)

lts put it another way,
commodities such as the fruit orange, no financial regulation has control to stop a farmer growing oranges. picking oranges or selling oranges.
if a company (international distributors) buys up containers full of oranges and form them into commodities. then thats between the company and the financial regulations.. not the farmer.
the financial regulators make sure the company is buying what it said its buying to then allow the company to legitimately offer options for customers to buy/trade commodities(not th actual oranges, as thats separate)

farmers are not worried about the sec, farmers only have to worry about pesticides and what not

so those mining and buying real bitcoin and not interested in ETF wont see any hurdles in regards to ETF regulation.
those trading or buying ETF shares wont own/touch the bitcoins of the companies etf

...
separate point. someone believes bakkt is a etf.. its not. an etf is assets owned by a company in their own right and those coins have to be held.
what people seem to get confused with is the same company offering a completely different service which is when a ETF contract expires. instead of the company handing out fiat back to the customer the company on behalf of the customer transfers the fiat to an exchange and buys btc separetly to then give to the customer.

btc does not jump in and out of the ETF at the whim of customers..
again the customer if a etf offers withdrawal of btc, its not using the ETF stash, but a side service that buys btc for that customer from an exchange using the customers funds

I think only a few people who can understand what ETF regulations are and many of them don't know including me. I don't know to details about ETF, and I don't overthink about that. I think the government still find a way about how to control the cryptocurrency so they can take some benefits from the crypto. So far, ETF has been a delay, and that is what I heard, I don't know if in the future, ETF regulations will be approved or not and I let them and see what will happen later.

But if ETF is approved, I think that will be a good sign for bitcoin to be approved in many aspects as that will be a new way for people to know about bitcoin and they will try to use bitcoin as other people did.

Well said. In my country, most of the locals here use a third wallet app in order to do business (Which is coins.ph). It isn't necessary mean we lost are freedom because we chose to do it on your own free will. ETF is not a bad thing, in fact it is beneficial to the world to reduce the adoption process of the people. It's just that it is taking too long to be accepted until now.

no they are not . if im not mistaken , people are excited for the etf because they assume that the value of btc will greatly increase if its approve .

 the etf rumor is hot last year and there are updates about its on and off approvals but now , i dont see any news regarding on etf but one thing i can say , btc is still looking good without etf and btc can still grow without etf but with only the help of btc investors.  .

It's better we are not skeptical beforehand with the existence of the Bitcoin ETF. Maybe ETFs can be a good start for Bitcoin or cryptocurrency in terms of regulation and price. With ETF many investment companies might be interested in the cryptocurrency market and this could make the cryptocurrency market excited again

Depends on how people understand well about ETF regulations, because a lot of the cyrpto holders since from the beginning of the proposal if  iam not wrong is against into ETf regulation to control crypto currency as independent digital currency and the bad result of ETF bcrto is undressed by the government their price value, but until now their nothing comfirmation about etf status approval. Meaning no need to worry all abput etf issue until the government not approve.

the ETF trustee still has to custody the bitcoins that form the basis for share creation, and investors can redeem blocks of shares from them for real bitcoins. that's who people are referring to.

i'm not sure why this distinction matters. when you buy "bitcoins" on an exchange, or a futures contract that supposedly settles in bitcoin, these are also essentially just IOUs that carry counterparty risk. the biggest risk with ETF investment is the same one as holding your coins on an exchange---you are trusting that account balances can be redeemed for real bitcoins.

the word "custodian" keeps popping up in this topic. and it makes me laugh

custodian is someone put in to look after something/someone. but doesnt own the property.
a school custodian is just the maintenance man
a police custodian just checks the arrested suspects dont escape and dont harm themselves or others
but does not own the person/asset.

in an ETF the company buys the bitcoins and its the companies property. they are not custodians. they are businesses with assets / collateral.
what ETF customers are buying are shares. they are not buying real bitcoins, just common stock shares

if WindFury was trying his hardest to get to a point. it would be worded more like
does offering common shares to the fiat financial industry to allow them to bet on the bitcoin price legitimately have more benefits than the risks of majority ownership of the circulation of bitcoin being owned by corporations.

People can actually do whatever they want with their bitcoins, including giving them to banks. This however has disadvantages and advantages...    There is the risk of complacency. Most people could begin to prefer the easy-to-use things in Crypto while the "real things" struggle to compete. There is also the possibility that real things will  become criminalized for operating outside the law

probably yes. but IMO it wouldn't be a failure of bitcoin's design so much as a failure of humans to properly use it.

i still worry that bitcoin is before its time. people are so driven by convenience. the natural tendency for newcomers (and even some old hands!) is to use a third party custodian. i don't know how that cycle will be broken. maybe people can only grasp the importance of being their own bank by experiencing severe custodial losses first.

Well there's certainly a great deal of room for personal opinion on that one, heh.

If it did happen (and I find it pretty unlikely), I'd say it depends on how much trust it would require from those of us not utilising their services.  If they started leveraging their influence and pushing for protocol changes, I probably would consider it a failure.

Then, I bring forth the question, "Can Bitcoin be considered a "failure", if the majority of all coins were held by third-party custodians?"

we're in no position to allow or disallow it, so it's a moot point. wall street wants it, and it's up to the SEC. and once they allow ETFs it's also not our business if people/institutions want to trust third parties. it's just like today with so many people using exchanges as wallets. it makes me shake my head, but what am i supposed to do about it?

people usually need to get burned a couple times before learning how important being your own bank really is.

I don't know why a lot of people think that a bitcoin ETF will make bitcoin rise in price either. Not saying that a price rise won't happen, because an ETF can give bitcoin a lot of legitimacy in the eyes of the masses, but it's just like any other open market whereas people can long or short bitcoin. In fact, it's also really possible that an ETF would drop bitcoin's price. In the end, it still, as always, boils down to supply and demand.

Could be either. ETFs will be used by people who doesn't care about financial freedom/sovereignty but only cares on the speculative aspect(whether bullish or bearish) of bitcoin.

Then the actual point. "Is allowing the custody of Bitcoin to institutional third parties, without thinking of the consequences, good or bad?"

The way that Bakkt is doing it with the warehouse, might be the best way of doing it. A Bitcoin ETF must be backed by actual bitcoins and the ideal scenario would be for the owners of those coins to have sole access to the Private keys for those coins.

I can understand that institutional investors would want to avoid having the hassle of dealing with the safekeeping of coins and wallets and such, so they would pay a third party to do it on their behalf. The risk is much lower for them to invest in Bitcoin then and it is backed by actual bitcoins. 

But what about if Bitcoin custodial services, and exchanges, cartelize then form an agreement with each other that would be possible for them to censor transactions.

Should the community encourage everyone their right of "freedom" to let your Bitcoins in be in custody of a third party?

It may not affect the protocol, but it can certainly affect the price. The trustee would issue and redeem shares based on market demand, meaning an ETF could conceivably lead the rest of the market due to arbitrage forces. The same goes for Bakkt or any other physically delivered bitcoin contracts. Plus, ETF shares can be short sold. When I strap on my tin foil hat, I can see some scenarios where Wall Street keeps a lid on bitcoin prices through these avenues, the same way they supposedly do with gold.

I got reservation for the ETF, maybe we might not need it anyway. I thought it could help in this current market to bring new investment from institution but the recent ETF is not a true representative of what we want. Just like adding a document with crypto name in SEC file. They request for a good sum of money from investors with no chance for investors with bitcoin crumbs.

The thing is though, most Bitcoin holders will probably ignore any ETF despite clamoring for it. All it means for them is more money in the market, and Bitcoin being legitimized as an asset class to some extent.

It would then come down to context as to whether it's bad or not. Is it bad to hold? For experienced Bitcoiners, that's almost certainly a yes. Actually holding coins is going to be better for just about every purpose. Is it bad for the market? It could be, but the opposite is also very possible, if not more probable.

At the end of the day, no ETF is going to affect Bitcoin itself, so I'm personally not against it. It may be bad for corporations to stock up on huge amounts of coins, but they're free to do just that anyway, ETF or no ETF.

With ETF, we are just indirectly giving chance to centralization of cryptocurrency which we should really discourage because there won’t be any difference from all the system that we have on ground already if we still use cryptocurrency in a centralized way. The reason why we have been so all over bitcoin is because it gave us freedom and one sense of ownership to our money and to our transaction, so why on earth would we give that out to ETF.

Sometimes when I see how we encourage and push for ETF, I really wonder if some of us really understand what cryptocurrency is about and what decentralization stands for. Well, one thing that we know is that even if ETF is being approved, it would still not stop bitcoin from being a decentralized coin which is what people want the most.

But do you consider the being decentralized of Bitcoin? Like if you do that ETF things, you are actually buying a Bitcoin but not actually owning it, it's just like you will escape the actual trading and owning of Bitcoin.
And for me, I don't think ETF can drive the price or Bitcoin at an 'appreciable level'.

The ETF is the way for users who cann't or don't want to understand the details of crypto. And for users of those countries where the crypto is in the gray zone or is banned (at least I know I person which wait ETF for that). In this case there will be no problems with the buying, nor with the selling, nor with the taxes.

Not everyone definitely will subscribe to  ETF, but everyone has their choice to make, it entirely boils to an individual on how they use their money. I personally hate a third party holding my money for me, but still, if this will bring more liquidity to the market it's okay.

The ETF agreement is just one of those initiatives that can easily help maintain the price of bitcoin at an appreciable level. Imagine a company guaranteeing your property without causing any financial commitment from your end. Basically, that is the idea behind ETF, I don't think this means a third party would be given the power  to control bitcoin on the market.

The most interesting thing that could develop from an ETF is people investing tax-free through their 401(k)s. It wouldn't be available at first through most employer plans, but it could be done through self-administered accounts. Eventually, who knows? Maybe Blackrock and similar firms will be offering exposure through regular employer plans within a few years. If there's demand for it, they'll make it happen.

@franky1

You don't say!  

... and your telling me this is a good thing ?

I believe bitcoin ETF may be beneficial, but it seems to me that we are far from seeing some bitcoin ETF... look at this news:

VanEck’s New Bitcoin Trust Assets Total Just $41K in First Week

only 4 bitcoins, this shows that investors want things well regulated and by the past news:

SEC Postpones Decision on Three Bitcoin ETF Rule Change Proposals



Source: https://cointelegraph.com/news/sec-continues-to-stall-on-btc-etfs-all-in-wait-for-breakthrough

maybe in the next 2 years we'll see some bitcoin ETF getting approved, because I highly doubt that before 2 years the SEC approves some  bitcoin ETF

No, bitcoin ETF is not necessarily a bad thing that can happen to crypto market. After all we all want to see bitcoin is being adopted everywhere in the coming future and at the same time we all know it doesn't going to happen overnight! We have to take baby steps to reach the goal and I see ETF as one of those baby steps which can fuel the adoption across the world.

However, I only support ETFs that are physically settled. Means, the ETF provider is going to deal in physical bitcoins and not just on the price of bitcoins. Physically settled bitcoin ETFs are actually useful to the market as it gives additional liquidity to the market.

I understand, that difference in opinion will be there as many people wouldn't want to comply with KYC norms or give up their identities and wealth in the hand of third parties! But being a law abiding citizen, I would personally want to see more and more physically settled bitcoin ETFs or investment assets to come to the market. It will not only increase the adoption rate but also make bitcoin more useful to the real world.

You are gonna risk your account for plagiarism if you do not quote the post properly. There are bots that identify a post for plagiarism automatically. Hence I would recommend you to quote the post properly.


And that's how the third parties take advantage of your situation and thus scam you.
Freedom does mean to do anything with your coins, but it also invites scammers and hackers to your den.

bitcoinFX..
an ETF is not somthing people use to own bitcoins. just like going to a betting shop is not somewhere people go to own a horse/greyhound

an ETF/betting shop is just used for people to buy a certificate that says thy put certain value in. and then bet on the results of the movements of the other thing they do not own and never did.


however those buying bitcoin via proper bitcoin buying means. can buy bitcoin and own bitcoin. but an ETF is not the tool to own bitcoin. its just a fiat betting/investment tool based on the results of bitcoins price movements

Exactly, one can ... "never own paper metals bitcoins."

...

- https://youtu.be/UxvmdR7oYdQ

again the bitcoins of an ETF were never the customers. the customers did not buy btc and then give them to a custodian.

a company buys the bitcoin from an exchange/private OTC and its the companies property. fully owned legitimately by the company. they then separately collateralise the holdings, and sell shares.
those buying shares dont own the bitcoin, before during or after.

as for the accounting/auditing. easy. just show the public keys of the companies holdings. anyone can check that the company is holding what it says.
EG if 20 shares is measured as 1btc. and the company has released 2million shares. then the company has to sign a message linkd to a hoard of 100k coins

Hear, hear ...

In one word ... Rehypothecation (bad). Example, ...

The Rehypothecation Of Gold, And Why It Matters
- https://www.zerohedge.com/news/2015-04-24/rehypothecation-gold-and-why-it-matters

Mt. Gox anyone ?

If you give custody of your bitcoins to a third party - then they are no longer your bitcoins.

- https://en.wikipedia.org/wiki/Possession_is_nine-tenths_of_the_law

Freedom isn't free. Not your keys, not your coins.

- https://en.wikipedia.org/wiki/Exchange-traded_fund

Yes. Bitcoin ETF bad.

we know its heading that way, regulation and adoption and ETF is just one of the approval we all need here. if you care so much of privacy and this ETF isn't how it must be then there are always option. i go to that option as well like getting more into the privacy coins but more of us are into making profit which isn't bad at all. BAKKT already started, we're almost there.

How? We can write angry posts on this forum or on twitter, but it won't prevent people from launching such platforms. It's also impossible to change the rules of Bitcoin to prevent creation of these platforms, because Bitcoin's protocol doesn't know anything about how the coins are used, and it can't know.


If all it takes to defeat Bitcoin is just launch an ETF, then Bitcoin is not that resistant. But I believe it's not the case.

The reality is that a minority thinks of it as a bad development for Bitcoin, while the (far) majority thinks of it as a positive development because price gains is all they care about. Majority will get what it wants in this case. I can understand both camps though, because there are definitely tradeoffs and benefits to be pointed out.

I'm leaning more towards the camp that wants to see the price go up. People can pretend to not find the price an important aspect all they want, but deep down they like it. It's just hard to admit for some because they're more worried about what other maxis think of them.

In the end, higher price leads to a more secure network, and more liquidity that can be used to invest in development or the ecosystem around it to make Bitcoin an even bigger phenomenon.

Do the "majority of people" use a broker service, though?  With the exception of some free shares I was given by my employer, I sure as hell don't, but that might just due to my distrust of traditional finance.  Because if people aren't using a broker, that's the only way casual investors can access an ETF.  I'm guessing most banks offer such services, but I suspect the majority of people are currently more concerned with putting food on the table in an age of ever increasing disparity between rich and poor.  Unless you meant the "majority of people with access to disposable income looking to invest in something", perhaps?

Then there's the generational gap to consider.  Are brokers keeping up with current trends?  I don't feel like brokers have made much of an attempt to engage with me, so I'm seemingly not their target audience.  Who else are they overlooking?  And where will those people look to store their wealth?  I get the impression younger generations feel that crypto is quite accessible to them, so perhaps they're more likely to want to hold their own private keys.

I suspect brokers will also be required to mention that crypto ETFs will be on the higher end of the risk spectrum, so that may also prompt casual investors to look at other options.  It's a widely held assumption here on the forums that a Bitcoin or other crypto ETF will unfold just like previous ETFs, but I'm not convinced of that.  A Bitcoin ETF won't be like a precious metals ETF in terms of volatility.  It will be an altogether different beast.

And then there's obviously that pesky first hurdle of how long it will actually take one of these things to get the green light from the bureaucrats.  Could easily be a few more years yet.  Will investors be prepared to wait, or will FOMO force them to download a wallet and do it the "proper" way?

There's just so many variables to consider.  There's no way to know how it's going to unfold.

i haven't looked at any of the bitcoin ETF specs too closely, but you can generally short ETFs. there are also leveraged ETFs (both bull and bear funds). if any ETF is approved, im sure short and ultra-short ETFs will be approved too. and any ETF with an open-ended creation/redemption process will affect the spot market via arbitrage, so shorters could affect prices.

i actually don't think ETF is bad, at least it is not as bad as futures and margin trading where they let people short bitcoin specially when they are whales and can manipulate the market and cause unreasonable volatility at times which is more damaging to bitcoin that it may look like.
in the end things like ETF can help introducing bitcoin to more people. which means it can even help those who don't want to "be their own bank" to enter bitcoin. maybe in time they realize what bitcoin offers and switch to directly using bitcoin.

That is a good valid point, majority of the people will find it difficult to safe guard their private keys and people will find it useful to invest in ETF.

Having more options when it comes to bitcoin is a welcoming thing. People take their individual decisions when it comes to investment and there is no point in discouraging, but letting them know about the pros and cons is the idle process. After all bitcoin is meant to be financial freedom from the clutches of centralized oppressive government.

I tend to agree -- it's a free market and all that. Although it does make me uncomfortable when I think about how much of the circulating supply is in the possession of a handful of entities like Coinbase, BitMEX, Bitfinex, Xapo, etc.

it wouldn't affect bitcoin's censorship resistance or hard money qualities, would it?

the only problem in principle is people employing third party trust and sadly, that's inevitable. from both philosophical and security perspectives, i really don't think the world was ready for bitcoin. nevertheless, it's here. those who don't value trustlessness will eventually pay the price.

I'm not sure if I agree with 'the community' when it comes to being your own bank. Sure, it's preferred in terms of having full control over your coins, but some people just don't care enough about the values we consider important.

People here have a hard time looking at the other side of the story because they find it necessary to promote their vision without taking into consideration that not everyone has a problem with third parties.

Bakkt exists because there is a demand for their service. Coinbase custody exists because there is a demand for their service, and so forth. If people consider these services valuable to them, then good luck to them.

What is this "Bitcoin community" you speak of?

Unfortunately, an ETF or other custodial Bitcoin securities is inevitable. Wall Street doesn't care about our principles. Besides, this space has been overrun by people more concerned about getting rich than being their own bank. Investors believe that an ETF or Bakkt = institutional money driving prices up, and that's what matters to them. I consider this a lost battle.

It'll all end in tears when an ETF trust or Bakkt's vaults get cleaned out, or trustees get caught "printing" custodied bitcoins. Real bitcoiners will be unaffected, though. That's what matters.

I can'y say that Bitcoin ETF is very good or bad. But I am sure about one thing. If Bitcoin ETF is confirmed, it will make a dump on Bitcoin price and Bitcoin will continue to get closer to $ 20k.

I believe Bitcoin ETF is good for Bitcoin adoption and awareness.  Imagine huge company buying and holding Bitcoin to back up whatever asset they are selling. Many of us probably misunderstood ETF as a third party controlling our Bitcoin but I think Franky1 had a good explanation on how ETF works and why it gives a positive view on Bitcoin and Bitcoin market.

What do you mean, what censorship ?
ETF if a economical instrument and financial option , it allows certain investors to get in within existing legal framework.
Even more, in reality ETF with high probability will not allow to buy BTC directly ut some option that covers BTC price.

Do you think it might just be approved?

To those bodies that will regulate cryptocurrency all these crypto technology doesn't matter and whether it defeats crypto purpose or not, they are not important since all they would see is the value in USD.  Price I think will still go up because the prices in exchanges still would be the first to look at.

ETF has the potential to eliminate security problems and the instability of the bitcoin market. Investors can still be introduced into the world of bitcoin and remain in a familiar and certainly regulated setting. Each ETF is bound to an index, and ETF performance tracks the performance of the underlying index. So the Bitcoin ETF offers a safer and more stable way for investors to experience the benefits of the Bitcoin market without plunging into the wild world of Bitcoin.

an ETF is NOT where you buy bitcoin and put them into a trusted custodian..
an ETF IS where a company buys thier own bitcoins. vaults them up as collateral of the company(assets) and then sell shares of their assets.
customers/investors of ETF's do not own the company nor bitcoins. they own shares that represent an allotment of coins.

the benefits people see is that instead of random people buying small amounts of coins on exchanges(not much movement in price) large ETF's buy large lumps of coins which can move the price.

the disadvantages people see is if the large ETF's dont buy from public exchanges thus not affect the public prices

the benefits of ETF's is that regulated financial industry can invest in ETF's for banking/pension/investment funds where as those same funds cannot really invest in bitcoin direct due to regulatory grey area's

the benefit is that it means bitcoin itself does not get heavily regulated out of the hands of average joe, because the financial sector has their gateway into investments, without directly touching bitcoin, but still reaping some of the benefits of the price movements

From the speculators point of view,ETF approval would be great,because it will bring fresh money to the BTC market,thus increasing the price.For some cryptography fanatics and libertarians,ETF approval is bad,because it puts more bitcoins under the control of the big banks,hedge funds and corporations and turns bitcoin into nothing more than a financial instrument in the dirty hands of Wall Street.Who's right?I don't know.We will find out in the near future.

At the end of the day, the ultimate choice is left to the individual Bitcoin owners themselves. They could easily choose to take care of their own portfolio alone. I myself would choose it.

It makes me wonder though, is this what is meant by Bitcoin adoption hitting the main road? And is it really nice for Bitcoin to go fully mainstream?

I'm also not so fan on Bitcoin ETF. Because the decentralization of Bitcoin itself became useless for me.
Look, even Andreas Antonopoulos against with Bitcoin ETF, featured on his youtube video here :
Bitcoin Q&A: Why I'm against ETFs

ETF might be useful for those ordinary people that have not enough knowledge to store their bitcoins in a safe wallet. But generally speaking, I don't think ETF is helpful for cryptocurrencies world. And the reason is simple. ETF acts as a third party and we use bitcoin and other cryptocurrencies to eliminate third parties.
Some people might think that as ETF provide an easy method to buy bitcoin, it's useful. But it's wrong. These people are those who have not enough knowledge and it's better to be out of the market. Bitcoin market doesn't need them as they help third parties get involved in our transactions.

My impression was that ETFs abandoned any pretence of custody?  Exchanges at least give you the option to withdraw the BTC to a wallet you control (assuming you manage to do it before they get hacked, anyway).  But with ETFs, all you're ever likely to physically possess is a slip of paper detailing what the basket of assets are that you're betting on.  When you cash out, the only thing they're going to give you is fiat.  You're never going to see the bitcoins.

Most people give custody of their Bitcoins into the hands of shady exchanges everday. At least a government-aproved ETF would have way higher amount of regulation and surveliance (which is something you want, if you are going to give custody of your coins for whatever reason).

On the big picture it's irrelevant for Bitcoin itself, you have always been free to keep coins on your own or appoint someone to do it for you. It may skyrocket the price in relation to fiat due the easy of access for big creditors.

"Bad" is a matter of perspective.  I'm not personally a fan of traditional finance getting involved, because it's not something that I can see bringing much benefit to the average user.  ETFs are a plaything for "fat cats" and a mirage of an oasis for middlemen.  I find it's generally speculators who are most keenly interested by the prospect of ETFs.  For the people who care more about freedom and censorship resistance, there's really not much to get excited about.

Does the crypto community need to discourage crypto users to not hold coins on crypto exchanges or online wallets? This is one of the most frequently given tips on this forum, but it does not affect people's awareness too much when it comes to security of their coins. Traders want to trade anytime, they need coins on exchanges, some others just aren't ready to be their own bank.

Bitcoin ETF is simply impossible to prevent, regardless of what crypto community think about it. For most it is still something positive, because most think only about price, and the prevailing opinion is that Bitcoin ETF will be something that will push the price to six-digit numbers.

I absolutely agree with you. Freedom means that you can do with your bitcoins what you want

A Bitcoin ETF defeats the purpose of being your own bank, because you're effectively letting another company hold the funds for you. It's pretty much an oxymoron. But the thing is, not everyone that buys bitcoin is buying it for financial freedom/sovereignty. Some are simply buying because they're betting that the price will go up in a certain timespan. Here's where the Bitcoin ETF comes in: the investor wouldn't need to risk holding their own funds and securing it on their own. Instead, they let a company that supposedly knows how to secure the funds, hold it for them.
[/quote]

You explained Bitcoin ETF propose very good, however, can we say for sure that such a company will definitely safe Bitcoin funds and be able to increase its amount?

The freedom to do what one wants with one's bitcoins necessarily includes the freedom to give custody of them to a third party. Some (such as those who are unwilling or unable to safely manage their own private keys) will find such an arrangement beneficial. And some will not benefit from such an arrangement, and choose not to use it. That's what freedom means.

Opinions are all over the place. Personally? Though I'm never planning on using it, I'm completely fine with it. More market liquidity is a win.

A Bitcoin ETF defeats the purpose of being your own bank, because you're effectively letting another company hold the funds for you. It's pretty much an oxymoron. But the thing is, not everyone that buys bitcoin is buying it for financial freedom/sovereignty. Some are simply buying because they're betting that the price will go up in a certain timespan. Here's where the Bitcoin ETF comes in: the investor wouldn't need to risk holding their own funds and securing it on their own. Instead, they let a company that supposedly knows how to secure the funds, hold it for them.

Shouldn't the communty discourage the creation of anything that gives up the custody of Bitcoin to third parties?

Although it might be good for its price, would it be good for Bitcoin as a censorship-resistant hard money?