User participation in self-custody wallets has declined significantly over the past year, while exchanges continue to consolidate their dominance in the cryptocurrency ecosystem. This is according to the VanEck Mid-July 2025 Bitcoin ChainCheck report, published on July 24, 2025, which analyzes user behavior regarding the custody of their digital assets.
According to VanEck, self-custody wallet usage fell from 30% to 23% in terms of monthly active users, representing an aggregate loss of approximately 14 million users in one year.
In contrast, exchanges gained nearly 4 million users over the same period. “Users are voting with their thumbs, and are increasingly choosing custodial exchanges over non-custodial wallets,” the analysis notes.
VanEck analyzed user trends regarding cryptocurrency custody. Source: VanEck Mid-July 2025 Bitcoin ChainCheck | VanEck
The firm attributes this trend to the operational fragility of self-custody for most users, despite the philosophical value of sovereignty.
“If you ask any crypto native how they store their private keys—if they want to answer—it will likely sound risky, haphazard, or downright precarious,” VanEck warns, referring to practices like paper notes or the use of password managers.
As VanEck points out, the creation of new accounts and the increase in exchange participation doesn't necessarily mean that users are abandoning the use of self-custody wallets. These users may employ a dual model where crypto assets stored on exchanges are used to trade or obtain or use immediate liquidity , all while keeping their long-term holdings in their self-custody wallet.
The report also clarifies that this preference for exchanges should not be interpreted as an outright rejection of self-custody. Some users may be active on centralized platforms for liquidity or access to other markets, without completely abandoning their principles of digital sovereignty.
“We don't want to attribute the recent success of exchanges with wallets solely to their custody services,” VanEck clarifies.
The firm concludes that while self-custody wallets remain a valid option, the market is shifting toward more accessible and institutionally backed solutions, even outside the realm of exchanges, such as exchange-traded products and public company treasury stocks.
In any case, these VanEck data reveal that the cryptocurrency industry is increasingly resembling the banking and finance industry in terms of custody modes and available services, including custodial services. While this makes Bitcoin more accessible to traditional investors and users, outsourcing custody of coins to third parties entails unnecessary and well-known risks.
