What an ETF does is allow people the ability to own bitcoin without actually having to go through the trouble and yes, potential hazards of utilizing their own personal wallets. Instead of trusting themselves to safeguard it, they are trusting a state-sanctioned corporate operation to do so.
On its face that's not a problem. But what I don't like about it is it gives Big Finance an avenue to start to get its grubby hands on bitcoin & crypto in general. A great thing about bitcoin is that it's a decentralized digital currency. That's good as it means there's no central bank-like entity that can control it's value by setting interest rates. Issuance of new bitcoin can only be done through mining so it's impossible to counterfeit in the standard ways fiat is with fractional reserve banking and plain button pushing by the Fed.
However, the same is true for gold. It cannot be counterfeited either. But that did not stop the finance magicians from being able to trade 100x more paper gold on the markets for every real gold that actually changes hands. So my concern about ETFs and the like is that they'll eventually start trading paper bitcoin in the same way. Some entity will claim they hold $20 billion of bitcoin and issue receipts for it, which will through various wizardry tactics enable 100x more than that to be traded. The artificial increase in bitcoin supply will serve to keep the bitcoin price suppressed in the same way gold and silver have been held down.
That's my concern. Whether that could actually succeed, I'm not sure. Unlike metals, bitcoin can be easily exchanged outside of a central trading exchange. Maybe crypto exchanges will serve as a competing price authority on bitcoin & other cryptos which may operate independently of ETFs and expose market irregularities.