Ledger implant tests Bitcoin ETFs as safer custodial solutions than hardware wallets

The newly discovered Ledger exploit has stirred broad industry debate over the safety of hardware wallets compared to effectively custodying Bitcoin holdings through exchange-traded funds (ETFs).

Large holders have been converting self-custodied assets to ETFs for “enhanced security” for years, which is one of the main “selling points” for ETFs, 21Shares co-founder Ophelia Snyder told Cointelegraph in an email on Monday, adding that the recent exploits made this phenomenon part of the “public discourse.” 

The remarks follow the discovery of a compromised Ledger wallet that contained an unauthorized hardware implant. Some blockchain investigators estimated that losses from these implants could top $86 million, raising questions about the security of self-custodial cold wallets. 

Related: Standard Chartered plans institutional crypto custody in Singapore

Hardware wallets are still safe, but providers need better threat modelling: Adam Back 

To be sure, hardware wallets can still be secure custodial options, but providers need a better understanding of the emerging threat landscape, according to Blockstream CEO and Hashcash inventor Adam Back.

However, Snyder said the main issue with self-custodial wallets is that their security depends on investors’ technical expertise and individual setup. She said:

“Without taking the time and rigor to set up properly, self-custody will always be less secure than handing over the assets to a specialist firm whose job it is to manage those protocols for you.”

Magazine: Bitcoiners turn to dice throws as self-custody setups are re-evaluated