Consensus 2023 attendees discuss future of crypto custody and agree on no more FTXs.

After the collapse of FTX, the issue of trusting centralized entities with crypto keys became a hot topic once again. According to the initial bankruptcy filings, several million customers are still waiting to retrieve between $1 billion and $10 billion worth of crypto assets that are tied up in the Bahamas-based exchange.

The collapse served as a reminder that self-custodying of digital assets, which involves keeping cryptographic keys (on one’s own computer, a hardware device disconnected from the internet or even on a piece of paper locked in a safe), could save consumers from being affected by schemes like FTX.

This article is an excerpt from CoinDesk’s inaugural Consensus @ Consensus Report , which is the result of intimate, curated group discussions that took place at Consensus 2023.

Crypto purists have always argued that self-custody is the only way to go, and that having control over one’s own keys avoids the dangers of centralization. However, crypto users have often found that self-custodying is nerve-wracking since there are only a few recovery mechanisms in place if users lose their keys.

A closed-door roundtable conversation at Consensus 2023 discussed how policymakers can create effective guidelines for consumer protection without undermining, and perhaps advancing, the crypto ethos of controlling one’s own assets. Participants came from various backgrounds, ranging from technology to regulation to business.

The challenge is significant. To illustrate, consider the responses to a poll question posed to the broader Consensus audience: What percentage of users have the skills/comfort to store crypto keys?

See also: Thanks Sam! How FTX Led to World’s Worst Crypto Policy | Opinion

Of the 169 attendees who responded to the electronic survey, just over half (54%) answered that less than 10% of crypto users were competent and comfortable storing their own keys.

Given this reality, the private discussion at Consensus, which was conducted among four groups seated at roundtables, addressed the following questions, including whether centralized institutions will always play a massive role as custodians for the industry…

Click here to download the full Consensus @ Consensus report.


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