Bitcoin ETF custody concentrates power in one place, and now a single operational failure causes dangerous ripples

The structure of spot Bitcoin ETFs, which package Bitcoin exposure into tradable shares held by a trust, delegates operational control to custodians. This centralization of authority, where shareholders own beneficial interests in the trust rather than the underlying keys, creates significant points of failure related to operational resilience and governance. With over $54 billion in spot Bitcoin ETFs, this structure is becoming core market plumbing, leading to a potential class system of 'exposure holders' (ETF buyers) and 'owners' (native key holders). Furthermore, ETF investors are constrained by traditional market hours, unlike the continuous trading of Bitcoin, meaning that any operational failure within the centralized custody stack could cause dangerous ripples across the market while retail investors wait for trading to resume.

(Source：CryptoSlate)