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Coldcard exploit highlights self-custody risks and ETF demand

Analysts at Cantor and FRNT said the hack could steer some investors toward bitcoin ETFs and managed custody rather than abandoning the asset class.

Reported · Written up by our desk · Market Structure

A Coldcard wallet exploit that drained investors bitcoin from self-custody accounts is drawing attention to how hardware and software security can affect demand for regulated crypto products, according to CoinDesk.

Cantor said the breach could be a positive read-through for crypto-related equities tied to institutional adoption, and it suggested the incident may drive Coldcard users toward managed custody providers, potentially benefiting firms including Robinhood Markets, Coinbase, BitGo, Bullish, eToro and Gemini.

FRNT Financial said the exploit could increase demand for bitcoin ETFs as some investors look for alternatives to self-custody, while both firms characterized the longer-term impact as adaptation rather than abandonment.

CoinDesk reported that researchers traced the exploit to a flaw in the wallet firmware, and that at least 1,816 bitcoin, worth about $114 million, had been drained from more than 5,200 addresses since July 30, underscoring the risk even for holders who control their own private keys.

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