The "open conspiracy" behind crypto ETFs

ETFs have consistently been one of the greatest innovations in modern finance. They have transformed how millions of ordinary people invest by providing liquid and easily accessible diversified investment tools. They are a product of off-chain financial infrastructure, optimized for the world in which they were created. The problem, however, is that ETFs were not built for the on-chain world. These were designed for markets that close daily, settlements that take days to complete, and a system that relies on intermediaries to execute creation and redemption. Coupled with high fees and static asset portfolios, this once-reasonable model now appears increasingly outdated. We are in a new era where assets are used for purposes beyond governance and dividends, transactions are programmable and executed by code, not humans, and wealth can grow on-chain. This raises a question. Why wrap next-generation assets in designs from the last century? Crypto ETFs haven't moved the model forward—they've simply crammed on-chain assets into traditional financial structures. Your "Stolen" Rights

When you buy an ETF, you only own the shell that wraps the assets, not the underlying assets themselves. The ETF issuer holds the actual assets, depriving you of the rights and benefits you deserve as an owner.

The "Big Three" BlackRock, Vanguard, and State Street account for nearly 60% of the global ETF market, managing over $11 trillion in assets and exercising significant voting power on your behalf.

Most ETF investors have no say in the governance of the companies they invest in.

This problem is even more pronounced in the crypto space because direct ownership of assets typically grants you staking rewards, governance rights, airdrops, lending opportunities, and other token utilities. Crypto ETFs may track prices, but they cannot transfer the on-chain benefits of direct ownership. Furthermore, while the spot crypto market operates 24/7, crypto ETF investors cannot trade when the stock market is closed. This inequality puts ETF investors at a disadvantage during overnight volatility. Next comes the limitation on asset inclusion. Investors are given pre-packaged options with no room for personalization. Not only do most cryptocurrencies lack corresponding ETFs, but existing ETFs may include tokens you distrust or wish to exclude. Finally, the biggest drawback for investors is the fees, which generate unprecedented profits for issuers like BlackRock. The Grayscale Bitcoin ETF charges up to 150 basis points in fees. For comparison, that's 15 times the fees of SPY, the most popular ETF tracking the S&P 500. For retail investors, this means continuously paying ETF fees for limited risk exposure, even though they could directly buy and hold Bitcoin on platforms like Coinbase without any custody fees. Everyone should customize their own ETF. High-net-worth investors avoid making ETFs their core holdings. Instead, they replicate the index by directly purchasing the underlying stocks (a process called direct indexing). This not only gives them voting rights but also unlocks something more important: tax optimization. When you own the underlying assets, you can choose which assets to buy and sell, and when to do so. This control is crucial during tax season—keeping the winners, selling the losers, and offsetting gains with losses. ETF investors, on the other hand, can only buy and sell the entire index. But the real breakthrough lies in on-chain personalization. Portfolios can be built with customizable weights and exclusion lists, dynamically reconfigured to new assets, immediately rebalanced during market downturns, and determine when and how to sell individual assets, rather than confining them to an ETF shell. For on-chain assets, this flexibility means the ability to choose where to lend and earn yields at the asset level—an option never before available off-chain. This "micro-differentiation" of on-chain assets means that anyone can now engage in direct index investing, whether you invest $10 or $10 million. Better infrastructure to enable this already exists. High-throughput blockchains like Base or Solana make this continuous, automated management feasible, with costs approaching zero. Smart contracts are the new middle managers, automating portfolio management while you retain ownership. They run continuously, executing strategies 24/7 without human intervention. Unlike the cumbersome user experience defined by early crypto efforts, this new generation of systems hides all the complexities, abstracting away operations like gas billing, multi-transaction signing, and cross-chain bridging. Don't pay the price for so-called "convenience." Proponents of crypto ETFs claim they make cryptocurrencies more accessible through familiarity and regulatory clarity. Buying cryptocurrencies through existing brokerage accounts offered by traditional institutions makes investors feel safer. But this shouldn't come at the expense of core investment returns. Crypto investors shouldn't be forced to choose between a traditional interface and actual ownership, which is exactly what next-generation crypto applications need to offer: the same familiarity and security as traditional brokerage accounts, while also focusing on long-term diversified investments. The ease of buying an ETF will be the same as buying a custom, on-chain, directly indexed ETF. Investors will no longer need to relinquish control, transparency, and the ability to use their assets for governance or lending. There are already some attempts at on-chain solutions, such as tokenized ETFs, but most simply replicate the "shell" model. The problem is that once tokenized, the ETF's trading is limited by the liquidity of its shell, not the liquidity of the underlying assets. For example, Bitcoin and Ethereum have deep liquidity, while an index that tokenizes Bitcoin and Ethereum in a 50/50 ratio does not. These tokenized ETFs completely miss the mark, attempting to provide outdated, primitive financial tools to an audience that deeply understands the inherent nature of crypto and the utility of direct ownership. This "shell" model is flawed in itself. A New Destination for Crypto ETFs? Between 2024 and 2025, the global ETF market grew from $11.5 trillion to over $15 trillion, and is projected to reach $30 trillion by 2030. But I see a different world. Global assets are moving on-chain and will eventually shed their physical shells. The future will grant every investor direct ownership of their assets, eliminating intermediaries and providing all the novel benefits of ownership. This is a world of automated portfolio management, seamless cross-chain execution, and built for digitally native assets. ETFs were remarkable in their time, solving real-world problems of the 1990s, but we no longer live in the last century. Instead of trying to adapt ETFs to crypto assets, we should build new tools for the future of finance. The infrastructure for this new reality already exists. All we need is the courage to use it.