Do Bitcoin ETFs Remove Custody Risk? Analysts Disagree
Jameson Lopp has argued that no sort of Bitcoin loss is solved by handing the asset to a 3rd celebration.
It led to a spat with analyst Willy Woo and different X customers over whether or not skilled custodians are safer in follow than people holding their very own keys.
A Custody Argument Plays Out on X
In a put up on the social platform, Lopp took aim on the declare that an ETF removes the concern of dropping BTC.
“There is objectively NO sort of loss that may be solved by giving your bitcoin to a 3rd celebration,” he wrote. “Third celebration custody is uncovered to each self custody danger PLUS MORE!”
A consumer named Dima conceded that custodians carry each particular person danger plus counterparty danger, however countered that most individuals are undone by their very own errors, equivalent to misplaced seed phrases and phished wallets. Furthermore, some ETF custodians now supply bankruptcy-remote segregation, that means buyer property are saved other than the agency’s personal, which exchanges as soon as lacked.
Lopp rejected the concept most individuals can’t self-custody, suggesting they simply aren’t prepared to place within the effort, and mentioned that segregation “doesn’t do jack if the underlying asset is misplaced.” He used his agency, Casa, for instance, noting that it has many older purchasers and consultants who do the work for them.
Woo then posted the numbers: 1.57 million BTC misplaced via self-custody, 1.51 million on exchanges and none via custodians of spot ETFs. The figures got here from a December 2025 report by River. A contemporary regulated custodian, he wrote, does a greater job than “mothers and pops at dwelling.”
The safety advocate replied that ETFs haven’t existed lengthy sufficient to undergo a disaster, and that almost all of them use the identical custodian. He then requested if Woo would relatively have danger unfold throughout hundreds or thousands and thousands of novice custodians, or concentrated with one skilled.
Coinbase Custody, which most spot ETFs use, has gone greater than eight years with out dropping cash, Woo identified, whereas self-custody misplaced 136,000 BTC and exchanges 13,000 BTC in that point. He referred to as the selection a false one: an individual’s personal self-custody and knowledgeable custodian every rely upon a single celebration doing its job, and the custodian wins due to decrease danger of bodily coercion via acts like wrench assaults.
Coinbase’s Record Is Contested
Lopp’s subsequent reply referred to as the never-lost-coins declare one which “appears to be in dispute,” pointing to Ari Paul’s latest allegation towards Coinbase.
As CryptoPotato reported in September, the BlockTower Capital founder posted on X that Coinbase had “lost” $25 million belonging to his agency years in the past and later alleged that it had lined up repeated hacks, affecting no less than a dozen different corporations and greater than $1 billion.
However, Paul’s claims are unproven, and he says a number of authorized processes concerning it are ongoing. Coinbase Support additionally replied underneath his put up that it had messaged him on to look into the difficulty.
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