Summary: BitMEX founder Arthur Hayes fires warning shots at the crypto community, revealing a potential takeover of the Bitcoin and crypto industries by traditional financial institutions like BlackRock. As crypto wrestles with its identity, Hayes argues that legacy financial systems are prepping to seize control, exploiting regulatory gaps and market vulnerabilities.
The Battle for Ownership
Arthur Hayes, the founder of BitMEX, has sounded the alarm in a recent blog post. According to Hayes, traditional financial giants (often referred to as TradFi) are quietly planning to claim stake in the cryptocurrency and Bitcoin (BTC) industries. This comes at a time when the bear market has led to the decline or complete closure of several crypto firms.
The Problem Isn’t Crypto; It’s Control
Hayes gets straight to the point: “Crypto itself was never the problem—this issue is who owns it.” He argues that traditional banks and asset managers have warmed up to cryptocurrencies only after the competitive landscape was cleared of newer, less resilient crypto firms. In essence, they are capitalizing on the lack of competition to assert control over what is perceived as the only viable antidote to inflation: cryptocurrencies.
Fee Extravaganza and Crypto ETFs
Banks and asset managers are strategically positioning themselves to be the sole providers of crypto-related financial products like exchange-traded funds (ETFs). They would offer these to clients in exchange for fiat money, pocketing exorbitant fees in the process. Such maneuvers could undermine the decentralized essence of cryptocurrencies by making these institutions the crypto gatekeepers for their colossal deposit bases.
Hayes also warns that collusion between banks and regulators could lead to the restriction of in-kind redemptions, essentially forcing investors to convert their crypto to fiat before withdrawal. This would trap them within the existing corporate banking system.
The BlackRock Factor
Arthur Hayes explicitly calls out BlackRock, the world’s largest asset manager, for potentially disrupting Bitcoin’s consensus network and the mining industry. He raises valid concerns over the intentions of asset management giants like BlackRock in affecting Bitcoin Improvement Proposals. Specifically, these proposals could have increased privacy or censorship-resistance, something that goes against the grain for centralized asset managers like BlackRock. Hayes chillingly notes, “Larry Fink doesn’t give two fks about decentralization.”**
In a world where decentralization is hailed as the future, it’s both ironic and concerning that the legacy financial system could infiltrate this new frontier. Hayes’ warning must serve as a wake-up call to protect the integrity of cryptocurrencies, especially as traditional financial systems seek to corner this nascent market.