SpyMasterTrades on Nostr: By approving a Bitcoin spot ETF, the #SEC will facilitate mass adoption of Bitcoin, ...

By approving a Bitcoin spot ETF, the #SEC will facilitate mass adoption of Bitcoin, but it will also pave the road for banks to eliminate self-custody.

Portfolio managers will increasingly incorporate these ETFs into their #portfolio holdings, which will increasingly render #Bitcoin an established asset. This, in turn, will impair the government's ability to subsequently ban Bitcoin.

Nonetheless, there will come a time when the traditional #banking system fails, and the governments that are controlled by multinational banks will seek to impose a ban on the self-custody of Bitcoin. The mandate will be similar to Executive Order #6102, which banned the self-custody of gold in 1933 to curtail widespread bank failures. The very purpose of a bank is to #custody your assets for you, as this is how bankers siphon off your wealth to enrich themselves.

Thus, your ability to self-custody assets is a direct threat to the #banks and they will try to stop you from holding your assets in self-custody. They will use the government to compel you by law to send your Bitcoin to a #FederalReserve bank in exchange for fiat #CBDC or paper Bitcoin (shares of a Bitcoin spot #ETF).

This time around, however, bankers (and the governments they control) will be unable to stop the self-custody of #decentralized, permissionless digital money. We've entered an era where many digital assets are being held in the custody of decentralized protocols or #DAOs. These decentralized entities are not fully within the jurisdiction of any government and the protocols that govern their assets are not centrally controllable. This will become a major problem for banks because there is no entity, (no person, no corporation, no governmental body), that they can compel by force to turn over the assets.

Banks will soon discover that not only are they unable to control decentralized protocols, but that these protocols will replace them completely. The bank-led government crackdown on #centralized exchanges that we're currently seeing only increases the market share and utilization of #decentralized protocols. The more the government cracks down on cryptocurrency, the more decentralized it becomes, which counterintuitively makes it harder to regulate.

Governments will next try to use CBDC to prevent the convertibility of fiat currency into decentralized digital assets. However, this will not only fail in this aim, but it will further destabilize the #fiat system by dramatically increasing money velocity, which is an input for inflation. Although inflation will also increase because of many other causes (e.g. spiraling public debt), higher inflation will bring fiat currency ever closer to the hyperinflationary event horizon. The worse inflation becomes, the less willing ordinary people are to convert their #labor into increasingly worthless fiat currency. As a result, ordinary people will increasingly seek to convert their labor directly into Bitcoin and/or other perpetually scarce digital assets that protect purchasing power over time better than hyperinflating fiat currency.

Eventually, cryptocurrency and de-fi protocols will come to be viewed as the natural evolution of financial markets. By restoring hard money, through means of trustless, decentralized, and publicly auditable protocols, de-fi is paving the way for a more stable financial system that is not perpetually plagued by financial crises that are inherent to a trust-based system fraught with counterparty risks.

By creating a trustless protocol, the #Byzantine Generals' problem has been solved. For the first time in the history of financial markets, #counterparty risk has been effectively minimized. Counterparty risk is what has underpinned every great financial #crisis in the past.