Japan’s parliament voted to move Bitcoin from a payments regime to a financial asset class, opening a direct path for domestic spot ETFs. The top tax rate on crypto gains will drop from 55% to 20% by 2028. On Bitcoin And, David Bennett argued this legitimacy invites the surveillance Bitcoin was meant to evade, describing institutional inflows as “peeing in the pool.” South Korea is following suit, updating 1950s-era property laws to tokenize government bonds by 2027.
“When assets are held by regulated intermediaries, they are subject to a level of regulatory pressure that individual holders should avoid.”
- David Bennett, Bitcoin And
Regulation is proving self-defeating. In the EU, the MiCA framework designed to channel users toward regulated platforms triggered an exodus. Analyst Frederico Rivi noted that when Binance suspended services, roughly 70% of withdrawn funds went into self-custody wallets, not other exchanges. Users physically removed assets from regulatory oversight.
The pragmatists see this institutional absorption as necessary. Dan Held argued on Bankless that if Bitcoin is to reach a $100 trillion market cap, it must exist on legacy financial rails. The entry of BlackRock and MicroStrategy makes the asset ‘too big to fail’ for regulators, providing a different kind of political hardening. Held noted the world chose Bitcoin as a treasury asset.
The cypherpunks disagree. Parker Lewis argued on What Bitcoin Did that the narrative shift toward calling Bitcoin “digital capital” is a marketing tactic that confuses the public and risks centralization. He said buying Bitcoin through a company wrapper like MicroStrategy guarantees you end up with less Bitcoin than direct ownership, and corporate stocks will eventually trade at a discount to their holdings.
“If you pay a 50% premium for a stock holding Bitcoin, you are getting significantly less Bitcoin than if you bought the asset directly.”
- Parker Lewis, What Bitcoin Did
The rift is fundamental: one side sees custodial layers as a bridge to global scale; the other sees them as a trap. The math favors self-custody, but the market, for now, is absorbing Bitcoin into the old system.
