Another reason why you need to think twice before using custodial wallet

[5W-KILO]

Maybe when people start to realize that these centralised governments are after their every movement they will start taking privacy more serious because tell me how this is not getting out of control already?



This is the second time that I am seeing something like this in this month of August, now you can't make any Bitcoin transactions without some form of identification.

Here is another, from Xapo, one of the most hated Bitcoin holder in my list, because they cater away with my Bitcoin years back,  I was new to Bitcoin and Xapo looked like a good option without me doing any research to tell the difference between custodial and non-custodial wallet.



Thankfully Bitcoin transaction from one wallet to another using ID won't work unless you are using Xapo like wallets (custodial).
The Agenda is real, they won't stop.

[un_rank]

Any form of privacy is a problem to all governments. Some will not be as direct as this but will subtly implement it on any centralised exchange within yhwur jurisdiction so they will all need you to KYC before you can transact.

If you're using a centralised service you're already opting to break your pseudoanonymity and if you're keeping your coins stored on such platform you're giving up control entirely.

- Jay -

[Odogwu-Blockchain]

Those are centralized platforms and they can do whatever they want to do, with your transaction. As long as your coins are under their custody, they have every right to make decisions that will enable them be in control your coin movement, and transfers to and fro.

It's nothing new to me anymore, imagine setting minimum of $700 via crypto payment, the custody is too clear and obvious.

[_act_]

It was UK and EU, but now South Korea. Later more countries may join, but people that want privacy will still have it. If all transactions are tracked, that is very dangerous. The blockchain is available to everyone to see, what if the bad people can be part of the government and can track people and use the information against them and be used in wrench attacks? Anything is possible tomorrow, noncustodial is very important.

[Alphakilo]

Those are centralized platforms and they can do whatever they want to do, with your transaction. As long as your coins are under their custody, they have every right to make decisions that will enable them be in control your coin movement, and transfers to and fro.

It's nothing new to me anymore, imagine setting minimum of $700 via crypto payment, the custody is too clear and obvious.

This makes me come up with the conclusion that inorder to be safer and be truly decentralized with self custody wallet for ones Bitcoin holdings or investment, they must learn how to use the decentralized systems to avoid all this palava of CEX being used by the government to gain control and collect data of every individual who thinks privacy exist within the convenience of using custodial platforms.
No authority can actually demand an ID or have the guts to freeze your transactions when you can generate your own seed phrases and transact directly on the Blockchain without an intermediary, that's why a true Bitcoin investor should learn how to use decentralized channels to their benefits instead of settling for convenience and trading privacy for transfer limits and purpose of spending or source of earnings.

 

[Z-tight]

what if the bad people can be part of the government and can track people and use the information against them and be used in wrench attacks?

Something similar happened in France, were a French tax official was caught selling personal information of crypto investors to bad actors, which led to so many incidents of a $5 wrench attack. More recently, it was also discovered that an FBI agent stole cryptocurrency worth $1m, and he was able to pull that off because of his access to sensitive information stored by the FBI. These cases raise the question of who has access to sensitive information citizens provide to their government and would they use it for bad purposes.

[bhadz]

It also happened with our local exchange, where, for every transaction that comes to my account, they're asking for its source and have to encode it by myself. It was a hassle when they did that last year. As in, for every amount I have received on my account, even it's also me, they're asking for those details. But all of a sudden, there were no announcements, and they removed that. I wonder why it's gone all of a sudden, and despite that, I don't like it; I was about to get used to it.

[AVE5]

Thankfully Bitcoin transaction from one wallet to another using ID won't work unless you are using Xapo like wallets (custodial).
The Agenda is real, they won't stop.

The topic you've brought up here to be discussed is about the Xapo centralized crypto platform approach on the demands of user's submitting more of their personal details to the platform as the authority demands, isn't it?
Well as long it's a centralized wallet I honestly don't find the new rules weird because I and those of us who knows are aware that the government would want to know you better by grabbing your details in other to generate traceable data's about you just in case it's necessary.
Why complain about the need of your ID when you could do some data verifications like image captions. Uploading of user's ID before gaining access to your fund's is also what most exchange have been practicing.
If you want privacy, then use non custodial wallets where you've full control of your fund's without exposing your privacy and data's.

[macson]

It was predicted that anyone who uses a custodial wallet will only be subject to stricter controls and tracking. That is because regulators will continue to introduce policies that further tighten crypto transactions for various reasons. The moment someone uses a custodial wallet, they can say goodbye to their privacy, because their transactions are so easy to track and link to their identity.

For those who aren't particularly concerned about privacy and don't care about their transactions being tracked, they might consider it a common occurrence and nothing to worry about. However, for people who value privacy, a self-custody wallet that is never connected to any exchange can be the best decision they can make to protect their privacy.

[Russlenat]

Those are centralized platforms and they can do whatever they want to do, with your transaction. As long as your coins are under their custody, they have every right to make decisions that will enable them be in control your coin movement, and transfers to and fro.

It's nothing new to me anymore, imagine setting minimum of $700 via crypto payment, the custody is too clear and obvious.

You entrusted them with your coins, its as good to say that they will take care of everything and let them manage it, even if it means you will be put at the losing end while they'll be having the best advantage.

However, not everyone sees this because of their too much trust to centralized platform, or probably they have seen this coming but since they don't want to employ high responsibility on theirselves, they just trusted the other party because there's no other choice.

Non-custodial wallet is still the best, yet not everyone is responsible enough to make it succeed.

[Agathamay]

I've see a a post where someone was indirectly advocating for the use of centralized exchanges simply because of the stress of being responsible for their predicate keys and it was funny to me because in recent time, I've seen someone who shares same ideology and that's why I want to thank you for this post because all we need to do is create awareness regularly to help discourage people from that act because it always leaves them at the mercy of those exchanges.

It also happened with our local exchange, where, for every transaction that comes to my account, they're asking for its source and have to encode it by myself. It was a hassle when they did that last year. As in, for every amount I have received on my account, even it's also me, they're asking for those details. But all of a sudden, there were no announcements, and they removed that. I wonder why it's gone all of a sudden, and despite that, I don't like it; I was about to get used to it.

Yes it truly happened in our country and during that period, I also saw a screenshot of a balance of over $1m on the exchange he which was frozen and I really felt for the owner of such account and blamed him for not checking his email regularly and things and stories like this should be some reasons why ought to take our privacy and security very serious.

[PrivacyG]

It is not getting out of control.  If you thought Bitcoin would grow with no restrictions and Governments clapping their hands and talking about how useful Bitcoin is, you are naive.  And if you thought the '2030, own no thing and be happy' was too far from imaginable reality, this is particularly it.

I still believe the Cryptocurrency space will grow in a rather dystopian way.  As in.  Most people will follow orders while a handful of people will continue to use Bitcoin and Monero under ground.  Realistically, they are looking for ways to make even non custodial Bitcoin holding traced.  They will probably find a way to do that too.  And only a few people would say 'no'.  They have gigantic balls on the Internet, but when the real order comes in they will all bow and follow orders.

-----

what if the bad people can be part of the government and can track people and use the information against them and be used in wrench attacks?

So what.  This would give them a great opportunity to make Bitcoin look bad again.

[Smartvirus]

This goes against the core values that Bitcoin did sort of protect. It’s some of the reason why Bitcoin has just got to go mainstream. Having a high level of dependency on centralized systems to function isn’t favorable for a decentralized finance. There would always be government influence even when they coat it as security measures meant to limit and track illicit elements in the cryptospace.

what if the bad people can be part of the government and can track people and use the information against them and be used in wrench attacks?

It’s an issue that some might over look.
We all know how those within the public service can be corrupt and might even communicate these details to those that can do some serious harm if not themselves.

How about situations of hacks or rogue agent/staff. It’s important to minimize where you can get your informations leaked and this isn’t helping that course.

[Sanitough]

Any form of privacy is a problem to all governments. Some will not be as direct as this but will subtly implement it on any centralised exchange within yhwur jurisdiction so they will all need you to KYC before you can transact.

If you're using a centralised service you're already opting to break your pseudoanonymity and if you're keeping your coins stored on such platform you're giving up control entirely.

- Jay -

As long as you enter centralized platforms, your privacy will definitely be highly compromised. Privacy does not matter to them, but all they want is to take full control and monitor all our transactions, and suspect easily if they have seen unusual transactions that aren't acceptable for them.

This is certainly the reason why I hate centralized platforms. They act as the real boss, and take full control of our accounts and transactions, like they really own them and access them anytime they want. Privacy is their biggest enemy.

[Ziskinberg]

Lets make it clear and simple. If you chose custodial wallet, you don't have full control over your digital funds and you can lose them anytime without uou noticing it. But if you want non-custodial wallet, you have the full control to everything, and you can secure a safe future for your coins because you take high responsibility on safeguarding them 24/7. So think of it, which one is the best?

[Darker45]

This isn't anymore surprising. As a matter of fact, this has been implemented in my country for years already. Our central bank here has already issued regulations in line with the Travel Rule. Part of which is to require withdrawals with a recipient's name. Later on, they also removed threshold limits. They're aggressively killing privacy. If you aren't careful, even your non-custodial wallets would lose all anonymity.

Lets make it clear and simple. If you chose custodial wallet, you don't have full control over your digital funds and you can lose them anytime without uou noticing it. But if you want non-custodial wallet, you have the full control to everything, and you can secure a safe future for your coins because you take high responsibility on safeguarding them 24/7. So think of it, which one is the best?

With a number of exceptions, though. With what happened recently, it seems "full control" is becoming a myth. One who has been hodling on YoBit could have laughed at somebody else for keeping his on a hardware wallet.

[SilverCryptoBullet]

Maybe when people start to realize that these centralised governments are after their every movement they will start taking privacy more serious because tell me how this is not getting out of control already?



Thankfully Bitcoin transaction from one wallet to another using ID won't work unless you are using Xapo like wallets (custodial).

Your Bitcoin transactions are public, not private, and they are traceable on the blockchain and block explorers. If you leaked your Bitcoin addresses somewhere, you will be traced online and governments might possible know about that too.

Custodial or non custodial wallets, if you don't have good practice with your wallets, addresses, UTXOs and other online activities, you will be identified and traced by governments.

There are other risks with centralized exchanges, online platforms and custodial wallets.
Events made you scare about custodial wallets, centralized exchanges.
Why KYC is extremely dangerous – and useless.
Stop the FCC's KYC Regime.

[X-ray]

Believe it or not it's just the beginning. The OECD is currently leading crypto data collection hubs called CARF to collect crypto data just like how they collect traditional banking data around the world, a custodial wallet will be a restrictive as traditional bank account and the data collection has begun in 1 january 2026 while data sharing will start in 2027.

The fact that exchange frequently suffer data breach like coinbase databreach incident is enough reason to stop using custodial wallet if you don't want wrench attack, I'm sure there are tons of data breach cases that went unreported because it will taint those big exchanges' reputation.

People don't appreciate privacy and self custody until the government start probing their things and freeze their money out of the blue.

In the future, privacy will become a scarce thing and you'd be grateful to have self custody over your own things and be grateful to Bitcoin as well.

[pooya87]

This is neither new nor surprising. That's the nature of majority of governments where they seek maximum control and surveillance. The degree of it is is higher amongst more authoritarian regimes which can be found a lot in the Western Bloc where South Korea is part of as well. This is more severe when the regime is also corrupt. For example US has the most dedicated and funded military department assigned for invasion of privacy and surveillance of its people (ie NSA) and they have always been pushing for more restrictions on anything privacy oriented.

The more Bitcoin adoption grows, the more we are going to see this types of news where the centralized authorities push back trying to prevent that growth.

[Peanutswar]

If you are using a centralized platform you dont have a full authorization with this, all you can do is to comply with their platform, they have all of the rights that they can do with your funds and even with your security whenever they want so having a custodial wallet recommends to not put most of your investment here you dont have a control with your money, that's why we recommend to use a non-custodial at least you will feel safe _{(well as long as you didn't too dumb things.)}.