Panelists Warn of Custody Risks as Bitcoin ETFs Gain Traction

At CoinDesk's Consensus Miami conference on May 6, 2026, industry experts discussed advancements and ongoing challenges related to spot Bitcoin exchange-traded funds (ETFs). Spot Bitcoin ETFs, now holding around $107 billion combined, have effectively addressed access issues by allowing cryptocurrency investments through traditional brokerage accounts. However, experts emphasized that problems persist in custody concentration and a low uptake among financial advisors.

Christopher Russell, head of strategic planning and analysis at Calamos Investments, pointed out that while the ETFs have opened investment channels, the $12.5 billion allocated by registered investment advisors represents a small fraction of the total assets under advisor management, which is approximately $146 trillion. He referred to this phenomenon as the "1% problem," highlighting advisors' discomfort with discussing the risks associated with even modest cryptocurrency allocations.

Jean-Marie Mognetti, CEO of CoinShares, raised concerns about the concentration of custody services, noting that reliance on a single provider, Coinbase, creates systemic risks in the market. He suggested that a diversified approach akin to hedge fund practices, which utilize multiple custodians, would be more prudent to protect assets.

Aaron Dimitri, general counsel for digital assets at Flow Traders, elaborated on how the introduction of ETFs recontextualizes Bitcoin investment from merely holding assets to constructing broader portfolios. He acknowledged that while ETFs do not erase Bitcoin's inherent volatility, they facilitate more sophisticated investment strategies.

Simeon Hyman, global investment strategist at ProShares, cautioned against viewing volatility as a mere problem to be engineered away, asserting that it can enhance overall portfolio performance if strategically incorporated. He pointed out that volatility can lead to improved risk-adjusted returns when assets like Bitcoin and Ether are included in investment portfolios.

The discussion reflects a broader backdrop of uncertain demand in the market. Strategy, noted for its substantial Bitcoin holdings, recently disclosed a $12.5 billion net loss in Q1 2026, prompting speculation about potential asset liquidations to meet obligations.

As the Bitcoin ETF ecosystem continues to mature, the panel's insights highlight the need for addressing custody risks and facilitating advisor engagement to support broader adoption of cryptocurrency investing. The path ahead will require careful navigation to overcome these lingering structural obstacles.