Zhao's Custody Conundrum: Exchanges May Offer Safer Alternative

Binance founder Changpeng Zhao has reignited the debate over cryptocurrency custody, stating that holding digital assets on exchanges can sometimes be safer than self-custody.

According to Zhao, hacks involving self-custodied assets often go unreported, while exchange breaches are more visible and tend to become broader market events.

The average security record of exchanges is dragged down by failures such as the $600 million Poly Network exploit or the $100 million Harmony bridge attack. However, reputable platforms like Binance have implemented multi-tiered security measures, including SAFU (Secure Asset Fund for Users), a user protection fund that covers losses from certain security breaches.

Zhao acknowledged that self-custody requires technical proficiency, including managing private keys, using hardware wallets, and understanding phishing risks. For the average user, these responsibilities can be overwhelming, leading to mistakes that result in permanent loss.