Non-custodial Bitcoin Wallets Cannot Be Banned, Says Director Behind Trezor Wallets

With regulators growing concerned about investors withdrawing their cryptocurrency from centralized exchanges, an industry director has assessed the likelihood of a potential ban on non-custodial wallets.

Stepan Uherik, the chief financial officer of SatoshiLabs, the company behind the Trezor hardware wallet, believes it is highly unlikely that governments around the world will ever ban the use of non-custodial wallets.

“It is highly unlikely that all countries would ban non-custodial wallets, or any other aspect of Bitcoin’s peer-to-peer network for that matter,” the CFO told Cointelegraph.

Uherik said potential efforts to ban non-custodial wallets are likely to be similar to the fact that certain countries have banned things like cryptography or torrents in the past. “The adoption of these technologies continued unabated. In a way, the attempts by governments to ban certain technology are good marketing for that technology,” he noted.

Also known as self-custodial wallets, non-custodial cryptocurrency wallets are designed to give the user full control over their own cryptocurrencies. Unlike custodial wallets, non-custodial wallets eliminate the need to rely on a third party to recover, freeze or seize the user’s crypto assets. This makes the user solely responsible for storing the private keys.

Since non-custodial wallets essentially allow users to “be their own bank”, many financial regulators and banking institutions were concerned about potential risks behind such tools.

Earlier this week, a major banking association in Russia proposed criminalizing certain use cases of non-custodial wallets for reasons such as the complexity of seizing crypto assets from such wallets. Earlier, the European Parliament committee approved a regulatory update that may interfere with exchanges’ ability to handle non-custodial crypto wallets.

There are apparently a few ways for governments to restrict the use of non-custodial wallets, but there is no way to ban it completely, the CFO of SatoshiLabs said.

Governments could try to ban certain non-custodial wallets from mobile app stores, given that there are only two dominant mainstream mobile app providers, Google and Apple, Uherik suggested, adding:

Such a ban would be easy to implement, but it would only cover some of the non-custodial wallets and would likely motivate users to look beyond the popular app stores. Hardware and desktop wallets would not be affected.”

Any attempt to ban non-custodial wallets would also spark strong opposition from non-governmental consumer protection organizations, as such censorship “is not in place in civilized countries,” he said.

Related: Crypto Industry Shoots Back After EU Vote to Block ‘Unhosted’ Wallets

Uherik also stated that open-source hardware wallets can withstand any ban, while hardware wallet makers are in a better regulatory position than most other Bitcoin companies as they do not offer custodial solutions or financial services. He concluded:

“Governments may delay Bitcoin adoption, but in the end Bitcoin will prevail. Bitcoin is an idea whose time has come, and no one can compete with that.”

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