Trust in exchanges has sharply declined
The latest Cointelegraph Research survey reveals that 65% of respondents have less trust in centralized exchanges compared to four years ago. Among them, 45% believe the decline in trust is severe, while 20% indicate a moderate decline. Only 16% report an increase in trust, and 19% feel that trust levels have remained unchanged.
The research further indicates that 57% of users now prefer to control their own private keys—this practice is known as self-custody—and they cite this as the main reason for the shift towards self-custody. This change suggests that, in addition to past negative experiences, self-custody is increasingly becoming a proactive choice for crypto users.
Failures of exchanges mark a turning point
The roots of this distrust lie in several key moments in the industry, particularly the bankruptcies of several major platforms. The earliest shocking event was the infamous collapse of Mt. Gox, which lost nearly 850,000 Bitcoins. Subsequently, QuadrigaCX went bankrupt due to the sudden death of its founder and the inability to access private keys, leaving customers unable to retrieve approximately $169 million worth of crypto assets. Most recently, the FTX scandal resulted in an $8 billion shortfall of customer funds, triggering a trust crisis across the entire industry.
Each event followed a familiar pattern: users entrusted their digital assets to centralized intermediaries, only to suffer massive losses when these platforms failed. The collapse of FTX, in particular, became a pivotal moment that prompted a serious reassessment of the risks associated with centralized custody.
The trend of self-custody is on the rise
In the aftermath of these events, the trend of self-custody has significantly strengthened. An increasing number of users are directly controlling their crypto assets by managing their own private keys, ensuring that their assets remain accessible even if exchanges fail or make mistakes. However, this shift also means that individuals must take full responsibility for the security of their assets.
Cointelegraph Research notes that while users are increasingly taking direct control of their funds, this approach also brings new challenges, such as private key management, setting up reliable backups, and directly facing online threats.
Risks like losing private keys, sending assets to incorrect addresses, or falling victim to phishing attacks have now become quite serious, as the protective mechanisms offered by exchanges are no longer applicable in self-custody scenarios.
Despite the waning confidence, not all users have completely abandoned exchanges. Many still choose to store their assets on centralized platforms due to convenience or a lack of technical expertise, indicating that this transition remains uneven within the community.
Interestingly, data also shows that a small portion of users have actually increased their trust in exchanges, which may be attributed to improved regulatory measures and increased transparency. This suggests that as long as the industry can effectively address the trust crisis, rebuilding trust is possible.