Regulatory scrutiny and rising thefts drive crypto custody shift in 2025

Regulatory scrutiny and shifting custody models are reshaping the cryptocurrency landscape in 2025, as reports indicate a dramatic rise in thefts from exchange wallets. Major platforms like Binance and Coinbase have seen a sharp increase in incidents, with over $2.17 billion stolen in 2025 alone, prompting urgent calls for improved security and a shift toward self-custody [1]. The scale of the losses has intensified risk warnings, with industry leaders emphasizing the vulnerabilities of centralized storage solutions.

The thefts have triggered a mass migration of digital assets to self-custody solutions. Notable figures, including Coinbase CEO Brian Armstrong, have urged users to consider taking greater control of their holdings. “We continue to remind all users that while Coinbase is committed to top-tier security, self-custody should be a consideration for anyone holding significant crypto balances. Your keys, your crypto,” Armstrong stated [1]. This push has led to a surge in hardware wallet sales as users seek to protect their assets from exchange vulnerabilities.

The trend echoes past crypto crises, such as the Mt. Gox and FTX collapses, which similarly disrupted market confidence and accelerated shifts in custody practices. Experts predict that the current wave of thefts will lead to a more decentralized approach, reducing reliance on centralized exchanges and fostering new custody models [1]. This evolving landscape is also prompting regulatory bodies to reconsider existing frameworks, as policymakers face the challenge of balancing consumer protection with the growing demand for decentralized options.

Institutional-grade custody solutions are also emerging as a key trend. Bullish, a Peter Thiel-backed crypto exchange, is preparing for a $4.2 billion IPO on the NYSE, signaling increased institutional interest in crypto infrastructure [2]. Analysts suggest that such developments could lead to more robust custody frameworks and greater liquidity in the sector. At the same time, the rise of self-custody has led to increased interest in DIY investment tools, as individuals take greater control over their financial decisions [5].

The broader implications of these custody shifts are becoming more evident. As investors move away from centralized platforms, demand for secure, compliant, and user-friendly custody solutions is expected to grow. This trend may also force regulators to adapt their policies to accommodate decentralized custody while ensuring market stability and consumer protection [1]. The custody debate is unfolding against a backdrop of heightened regulatory activity, with authorities scrutinizing legal frameworks governing digital assets.

As the market navigates this transition, the role of custodians—whether institutional or individual—is becoming increasingly critical. Investors, exchanges, and policymakers are being prompted to reevaluate the balance between security, accessibility, and compliance in a rapidly evolving ecosystem [1].

Source:

[1] Impact of Whale Activity on Shiba Inu Prices (https://www.onesafe.io/blog/impact-whale-activity-shiba-inu-prices)

[2] Bullish IPO Debut: Peter Thiel-Backed Crypto Giant Targets (https://m.economictimes.com/news/international/us/bullish-ipo-debut-peter-thiel-backed-crypto-giant-targets-4-2b-valuationis-the-new-crypto-wave-knocking-on-wall-streets-door/articleshow/123104348.cms)