Recent hardware-wallet security incidents have reignited a debate across the crypto industry: is self-custody, the practice of holding and controlling digital assets without relying on an exchange or other intermediary, practical for newcomers? Executives disagree, while alternatives such as multisignature wallets and seedless systems offer different combinations of security, complexity and usability.
The discussion matters because direct ownership is one of cryptocurrency’s defining ideas. But controlling assets personally also means taking responsibility for private keys, recovery methods and transaction approvals. According to Cointelegraph, recent incidents involving Ledger and Coldcard have highlighted that even products widely viewed as safer because they keep keys offline can carry security risks.
Hardware-wallet incidents renew the debate
Hardware wallets are physical devices designed to keep private keys away from internet-connected systems. They are often recommended as a way to reduce exposure to online attacks, but the recent incidents have raised questions about how much protection they provide and how easily users can respond when something goes wrong.
Some Ledger devices were affected by implants that stole recovery phrases. A recovery phrase is the sequence of words used to restore access to a wallet. In a separate case involving Coldcard, a firmware bug allowed attackers to recreate private keys and steal funds.
Those events have added urgency to a longstanding disagreement about the intended audience for self-custody. Michael Tanguma, chief executive of Bitcoin custody provider Onramp, compared the current situation with personal computers in the 1970s, when operating a computer required considerable technical knowledge. In his view, self-custody was not originally designed for newcomers, and simpler systems were needed before computers could reach a broad audience.
Safe Labs CEO Rahul Rumalla took the opposite position. He argued that self-custody was always intended to be available to everyone because the ability to own and control assets is central to crypto. However, he stressed that self-custody does not necessarily mean users must perform every security task alone. He compared the expectation that every crypto owner should become a security expert with expecting every driver to be a mechanic.
Multisignature protection adds complexity
One approach to reducing the risk of a single compromised key is a multisignature, or multisig, wallet. These wallets require several keys to approve a transaction rather than relying on only one. In principle, that can make it harder for an attacker to move funds after obtaining one key.
The additional protection comes with operational demands. Justin Hutzler, chief technology officer of Synergy Network, said traditional multisig systems can require users to coordinate signers, manage multiple backups, follow recovery procedures and approve transactions across several devices or participants.
That arrangement may be difficult for beginners to understand and maintain. It also does not eliminate every possible attack. Rumalla said multiple signers could still approve a harmful transaction if all of them were misled by the same compromised interface. In other words, distributing control among several keys may not help if the people using those keys are shown false transaction information and approve it.
Multisig therefore illustrates the broader trade-off in self-custody: stronger safeguards can also create more steps, more points of failure and greater responsibility for the user.
Seedless wallets shift the responsibility
Another model attempts to simplify wallet recovery by removing the traditional recovery phrase. Tangem’s seedless design generates a private key on one card and allows backup copies to be stored on up to two additional devices. Users no longer have to write down and protect a phrase, but they must keep the physical cards secure.
That change removes one risk while introducing another. Tangem confirmed that losing every device would permanently prevent users from accessing their funds. The company said it had received no reports of customers losing all their cards.
Physical protection also does not solve the problem of approving a malicious transaction. Zach Herbert, chief executive of rival hardware-wallet maker Foundation, said seedless backups can retain the self-custody model but criticized Tangem’s lack of a built-in screen. Without one, users depend on a smartphone to check transaction details.
Herbert warned that an attacker does not need to extract a private key if the user can be tricked into authorizing a transaction that empties the wallet. This highlights a distinction between protecting access credentials and confirming what a transaction actually does.
Moneyiar market picture
Moneyiar data at 08:08-08:09 on Oct. 24, 2026, showed declines across the four tracked crypto assets:
- Ethereum was $2,369.7632, down 1.25% over 24 hours and 2.51% over seven days.
- Sui was $0.9478, down 4.61% in 24 hours and 5.77% over seven days.
- Basic Attention Token was $0.1628, down 6.78% in 24 hours and 19.04% over seven days.
- Walrus was $0.03555, down 6.86% in 24 hours and 16.69% over seven days.
The self-custody debate is ultimately about more than the choice of a particular wallet. It concerns how crypto can preserve direct ownership while making security procedures understandable enough for people without specialist technical knowledge. The recent hardware-wallet incidents, along with the trade-offs of multisig and seedless designs, show that simplifying access does not remove the need for careful security decisions.
