Changpeng Zhao’s remarks come as billions of dollars in stablecoins continue to leave the Binance exchange.
Binance CEO Changpeng “CZ” Zhao has warned the crypto community against self-custody, claiming that 99% of those who choose to self-custody their crypto would lose it in some manner.
CZ has always supported self-custody, calling it a “basic human right,” but has always advised people to “do it well.” In February 2020, he released “CZ’s Tips” on self-storing cryptocurrency.
During a recent Binance-run Twitter Spaces on December 14, the Binance CEO urged caution for those using self-custody wallets, implying that security keys are frequently not stored securely, backed up, or properly encrypted, commenting: “For most people, for 99% of people today, asking them to hold crypto on their own, they will end up losing it.”
CZ said that having cryptocurrency on one’s own wallet is “not risk-free,” and that “more individuals lose money holding their own — lose more crypto when they’re holding on their own than on a centralized exchange.”
“The majority of individuals are unable to back up their security keys; they will lose the device.” “They will not have sufficient backup encryption; they will write it on a piece of paper, someone else will read it, and they will take those monies,” he added.
Even when self-custody assets are correctly maintained, “if a person goes away, they don’t have a method to distribute to their next of kin,” according to the Binance executive, but custodians like Binance may develop a “standard operating procedure” to fix that issue.
According to the Binance CEO, “various solutions have different risk profiles,” and it is up to the user to pick what is best for them.
Despite the fact that the majority of Binance’s operations are “centralized,” CZ reiterated that the company is “neutral” on custody and self-custody solutions, with the CEO stating in an earlier Twitter Space discussion on Nov. 14 that he’d happily shut down the centralized cryptocurrency exchange if users moved to decentralized alternatives.
“If we can find a mechanism to enable individuals to retain their own assets in their own custody safely and easily, then 99% of the general populace can do it,” CZ remarked.
