Crypto self-custody is a fundamental right, says SEC's Hester Peirce

Hester Peirce, a commissioner of the United States Securities and Exchange Commission (SEC) and head of the SEC’s Crypto Task Force, reaffirmed the right to crypto self-custody and privacy in financial transactions.

Peirce added that online financial privacy should be the standard. "It has become the presumption that if you want to keep your transactions private, you're doing something wrong, but it should be exactly the opposite presumption," she said.

The comments came as the Digital Asset Market Structure Clarity Act, a crypto market structure bill that includes provisions for self-custody, anti-money laundering (AML) regulations, and asset taxonomy, is delayed until 2026, according to Senator Tim Scott.

Many large Bitcoin whales and long-term holders are pivoting from self-custody to ETFs to reap the tax benefits and hassle-free management of owning crypto in an investment vehicle.

Hiesboeck attributed the shift to the SEC approving in-kind creations and redemptions for crypto ETFs in July, which allowed authorized holders to exchange crypto for ETF shares and vice versa without triggering a taxable event, unlike cash-settled ETFs.

"A move away from the self-custody mantra of 'not your keys, not your coins' is another nail in the coffin of the original crypto spirit," Hiesboeck added.

In February, notable Bitcoin analyst and investor PlanB, the developer of the BTC stock-to-flow model, announced that he transferred his Bitcoin to ETFs to alleviate the "hassle" of private key management.

PlanB’s announcement caused an outcry in the Bitcoin community, as many voiced concerns that handing over custody to a third party clashed with Bitcoin’s core values.