Global Crypto Policy Landscape

All over the world, countries are developing their crypto policies. Some users view these policies as protective measures against risks in the crypto market, while others see them as government surveillance.

According to a Coinbase survey, 56% of crypto users in the United States are familiar with self-custody solutions, with a 22% increase in non-custodial wallets since 2023. Researchers from the University of Illinois reported that self-custody wallets hold 35% of the total market supply, an increase from 25% in 2022.

Although decentralization is a core principle of the crypto industry, bad actors exploit it for illegal transactions. Nevertheless, many users prefer to maintain control over their tokens, driving interest towards the decentralized finance (DeFi) sector. Despite centralized exchanges advertising enhanced fund security, they have faced high-profile breaches.

Erosion of Trust in Centralized Platforms

Crypto wallet Exodus experienced a 107% increase in revenue, with CEO JP Richardson attributing this surge to the rising demand for self-custody solutions. “Self-custody is the future. As trust in centralized platforms continues to erode, more people are realizing the importance of owning their keys,” Richardson stated. He also noted that recent developments in the USA have been encouraging, as they actively engage with regulators to advocate for self-custody as a fundamental right.

Mykhailo Adzhoiev, founder and CEO of crypto wallet Cowchain, emphasized the belief that if a token isn’t in your wallet, it’s not yours. He stated, “Self-custody is no longer just for hardcore crypto nerds. It’s becoming the gateway for onboarding the next wave of users.”

Analysts at NAKA projected that self-custody wallets could reach $3.5 billion by 2031, as users increasingly prefer to control their private keys.

Impact of Crypto Regulations on Self-Custody

One key regulation, the Markets in Crypto-Assets (MiCA) regulation in the European Union, has been recognized as one of the most comprehensive globally, providing clarity and security in the crypto sector. It includes transparency, market integrity, strict compliance measures, and investor protection.

In the United States, the Securities and Exchange Commission (SEC) has historically intensified enforcement of exchanges, prompting users to turn to decentralized exchanges to regain control of their assets. While the new Trump administration has pledged improved regulations and enforcement approaches, the effectiveness of these changes remains uncertain.

The FATF’s Travel Rule mandates crypto exchanges to gather and share transaction details, raising privacy concerns. This directive has sparked a transition towards self-custody solutions, as users search for autonomy. Many countries are implementing similar regulations to promote this shift.