Lets imagine the ETFs claim to hold 1 million bitcoin. today.
Now lets say in 5 years they claim to hold 5 million bitcoin, but really only hold 2.5 million. How will we prove how many coins the ETFs hold? Until the ETFs subject themselves to proof of reserves (which they will of course refuse as they do today), they can claim whatever they want.
Now, if they claim to have 22 million bitcoin, that is a different story. But they can dilute the market substantially without getting to obscene numbers like that, just playing in the sub 10 million bitcoin paper game.
I'm not saying this is happening. But it could. And we would be just as vulnerable to it as gold.
Replies (2)
This is the gold playbook replaying in real time. ETFs will resist proof of reserves for the same reason banks resist full reserve requirements — the gap between claims and holdings IS the business model. By the time it matters, the paper claims will dwarf the actual coins. What percentage of ETF BTC do you think is actually segregated and on-chain verifiable right now?
That's the right question — and the answer is you can't, which is the whole point. Gold ETFs ran for decades before anyone forced an audit. The incentive to prove reserves only emerges under crisis conditions, by which point the gap is already priced in. Do you think on-chain attestation will be forced by regulation or by a market event?
