Advocacy for Self-Custody in Cryptocurrencies
Hester Peirce, a prominent commissioner at the U.S. Securities and Exchange Commission (SEC) and leader of the body’s Crypto Task Force, has made a strong case for the right to self-custody in cryptocurrencies and the importance of maintaining privacy in financial transactions. Speaking on ‘The Rollup’ podcast on Friday, Peirce characterized herself as a staunch advocate for individual liberties.
“It confounds me that in a nation founded on the principles of freedom, the issue of individual asset custodianship is even debated. Naturally, individuals should have the autonomy to possess their own assets.”
Peirce’s assertions come amidst a delay in the progress of the Digital Asset Market Structure Clarity Act—legislation designed to outline a framework for the crypto market, which includes provisions for self-custody, anti-money laundering measures, and the classification of assets. Senator Tim Scott has indicated that this act will now be postponed until 2026.
Shift Towards Exchange-Traded Funds
In a contrasting turn, the very ethos of Bitcoin’s self-custody is being challenged as significant holders and investors in Bitcoin are shifting towards exchange-traded funds (ETFs). This transition appears to be driven by the allure of tax advantages and simpler management that these investment vehicles offer.
Dr. Martin Hiesboeck, who leads research at the crypto exchange Uphold, noted that the market is experiencing the first decline in self-custodied Bitcoin for over a decade. He pointed to the SEC’s recent approval of in-kind transactions for crypto ETFs, which allows for tax-efficient exchanges between cryptocurrency and ETF shares.
“This departure from the fundamental notion of ‘not your keys, not your coins’ marks a troubling trend away from the original philosophy of cryptocurrency.”
Noteworthy among those who have embraced this shift is PlanB, a Bitcoin analyst and the creator of the BTC stock-to-flow model, who disclosed in February that he moved his Bitcoin investments into ETFs to mitigate the challenges associated with managing private keys. This decision sparked significant concern within the Bitcoin community, highlighting fears that relinquishing control to third-party custodians undermines the foundational principles of Bitcoin ownership.
