Demirors: Bitcoin ETFs shifted control to banks

Meltem Demirors, founder and general partner at early-stage fund Crucible, said in a recent interview that spot bitcoin exchange-traded funds transferred control of bitcoin to banks and large asset managers. She said the products moved bitcoin from its original peer-to-peer cash concept into an institutional investment vehicle.

Demirors argued that the ETF route did not increase bitcoin’s practical use. “My view is [that] crypto has an identity crisis. Shoving bitcoin into ETF did nothing to make bitcoin more useful. I spent 11 years of my life extremely excited about the opportunity to use bitcoin and crypto to change the financial system. Ultimately, the banks won,” she said in the interview.

She identified the 2024 launches of spot bitcoin ETFs as a major development that opened on-ramps for Wall Street capital and large managers. According to her, that shift prioritized product design for institutional investors over work on decentralized payments, on-chain utility and self-custody infrastructure for users.

Demirors also outlined a thesis that crypto could shift from an alternative monetary network into a backend technology layer for business customers. She described potential roles in artificial intelligence infrastructure and other business-to-business uses, which would change who depends on crypto and why.

Reactions in the crypto community were mixed. Some long-time supporters warned that ETF-driven institutionalization dilutes bitcoin’s founding principles and could make the asset behave like other risk-on investments tied to tech stocks and liquidity cycles. One user wrote online, “ETFs won the access battle, but she’s right that utility stalled — price action without usability is just speculation with extra steps.”

Other participants argued that regulatory alignment and mainstream access are necessary for the market to scale and survive. A separate comment from an online user called for optional access: self-custody for purists and ETFs for everyday investors, which the commenter said would support growth in the U.S.

Some early supporters have adjusted their positions as markets changed. Entrepreneur Mark Cuban has reduced his bitcoin holdings, and some promoters now point to privacy-focused coins like Zcash as closer to the original decentralization goals.

Outside major financial centers, use cases for crypto differ. In several developing economies, people and businesses use bitcoin and stablecoins as stores of value against inflation and as low-cost rails for cross-border remittances. Those practical uses have continued even as institutional products gained market attention in North America and Europe.

Demirors presented these observations as part of an ongoing debate about crypto’s direction and its role in the global economy.