In recent years, with the popularization of crypto assets, self-custody (i.e., individuals independently controlling private keys to manage digital assets) has become an important way to safeguard financial autonomy. According to Jinse Finance news, the latest digital asset report released by the White House explicitly supports individuals' right to self-custody digital assets and recommends that Congress pass legislation to confirm this right. The report also acknowledges that while privacy-enhancing technologies like crypto mixers, privacy coins, and zero-knowledge proofs protect users' legitimate rights and interests, they may also be misused by illegal actors for money laundering activities. Taking the Tornado Cash case as an example, federal prosecutors accused the privacy protocol of being used to launder billions of dollars, but its founder, Roman Storm, argued that he only released open-source code and did not control how users used the protocol.

This report has sparked widespread discussion. Many question: since the core of crypto assets is "whoever holds the private key has control," why is legal confirmation of self-custody rights necessary? Let's discuss this.

1. The Essential Difference Between Private Key Control and Legal Confirmation of Self-Custody Rights
   The technical foundation of crypto assets is blockchain and cryptography. The private key, as the sole credential for accessing and transferring assets, is essentially control through a technical means. Holding the private key means having de facto control over the assets, but whether this control equates to a right in the legal sense requires further analysis.

De Facto Status vs. Legal Status. Private key control is a de facto status, meaning asset possession achieved through technical means. For example, if someone holds a Bitcoin private key, they can independently complete transactions without third-party involvement. However, this de facto control does not automatically gain legal recognition. Legal status requires statutory law or case law to clarify rights attribution, scope of protection, and remedies. For instance, in traditional property rights, possession of real estate requires confirmation of ownership through a registration system; similarly, if the self-custody right for crypto assets lacks legal confirmation, its control remains merely technical, lacking institutional guarantees.

Legitimacy Confirmation. Private key control is inherently neutral: it can be used for both legal transactions and potentially illegal activities (such as money laundering or hacker theft). Legal confirmation of self-custody rights aims to distinguish legitimate holding from illegal activities, providing a basis of legitimacy for bona fide holders. For example, if the law clearly defines self-custody rights, individuals can assert their rights based on law when facing lost or stolen private keys; conversely, without legal confirmation, asset ownership may face disputes or even be universally considered illegal.

Exclusive Protection. While private key control can technically prevent others from accessing assets, it cannot address more complex infringements. For instance, when a third party obtains a private key through fraud, coercion, or technical vulnerabilities, relying solely on technical means makes it difficult to recover losses. Legally confirmed self-custody rights grant exclusive protection, including the right to prohibit infringement, recover illegally transferred assets, and request intervention from judicial or administrative authorities. This protection is similar to "exclusive ownership" in property law and cannot be replaced by technical control.

Judicial Remedy. If private key control lacks legal backing, it may face difficulties in asserting rights during disputes. For example, when self-custodied assets are illegally transferred, victims need to rely on legal processes for recovery; if the law does not confirm self-custody rights, courts may have no legal basis or even deny its legality. Conversely, legal confirmation provides a basis for judicial remedies, including freezing the infringer's assets, ordering restitution, or compensation. The White House report's recommendation for Congressional legislation aims to fill this remedial gap.

2. Potential Impacts of Lack of Legal Confirmation for Self-Custody Rights
   If self-custody rights remain in a legal gray area for a long time, not only may individual rights be harmed, but it could also hinder technological innovation and market development.

Rights Without Maintenance May Not Receive Legal Support. The decentralized nature of crypto assets creates tension with the traditional financial system. In many jurisdictions, the legal definition of digital assets is still unclear, and self-custody might be viewed as "informal" or "unprotected" behavior. For example, in some countries, courts hearing private key-related cases might refuse to provide remedies on the grounds of "lack of legal basis." Furthermore, some regulators associate self-custody with illegal financial activities, leading bona fide holders to face risks of asset freezing or confiscation. The absence of legal confirmation essentially weakens the sense of security provided by private key control.

Laws and Even Legislation Could Affect the Exercise of Crypto Asset Rights. Governments, aiming to maintain financial stability or combat illegal activities, might introduce regulations restricting self-custody. For instance, some countries have proposed banning privacy coins or requiring private key backups to designated institutions. While such policies aim to regulate the market, they may excessively infringe upon individual property rights. If the law does not explicitly confirm self-custody rights, individuals may be unable to challenge such regulatory measures. The White House report's recommendation for Congressional legislation is precisely to prevent excessive intrusion of public power into the private sphere while ensuring regulatory objectives.

Market Trust and Systemic Risk. Legal uncertainty can dampen market participation. Institutional investors and individual users might avoid self-custody due to concerns about unprotected rights, turning instead to centralized platforms. However, this could repeat the FTX collapse scenario—where user assets were misappropriated or lost. Legal confirmation of self-custody rights can enhance market trust in crypto technology and promote the healthy development of decentralized finance.

3. Recognizing Self-Custody Rights Does Not Mean Absolute Freedom
   It must be emphasized that legal confirmation of self-custody rights does not equate to granting individuals unlimited freedom. The exercise of any right must be premised on not infringing upon the rights and interests of others and the public interest.

Prohibition of Abuse of Rights. Self-custody rights should be subject to laws such as anti-money laundering and counter-terrorist financing. For example, when individuals use crypto assets for illegal transactions, law enforcement agencies can still restrict, freeze, or recover assets based on laws combined with relevant technical means. Legal confirmation of self-custody rights precisely provides a standard for distinguishing legal from illegal behavior, rather than offering shelter for lawbreakers.

Balancing Public Interest. The government has the right to implement reasonable regulations on self-custody to maintain financial stability, tax fairness, or national security. Examples include requiring reporting of large transactions or cooperation with judicial investigations. The White House report also emphasizes that digital asset innovation must be "responsible" in nature. The essence of legally confirming self-custody rights is to seek a balance between individual freedom and the public interest.

Synergy Between Technology and Law. The future of crypto assets depends on the co-evolution of technology and institutions. Private key control provides the technical foundation for decentralization, while legal confirmation builds a framework of order under social consensus. Only by complementing each other can "technological empowerment" and "rights protection" be unified.

While the private key control of crypto assets is indeed a manifestation of the technological revolution, technology alone cannot solve complex issues like rights attribution, legal remedies, and balancing public interests. The White House report's support for self-custody rights and its call for legislative confirmation recognize that technical facts must be transformed into legal status to achieve genuine property rights protection. In the digital age, the law should not be absent from technological innovation but should proactively construct an adaptive institutional framework—one that protects individuals' autonomy over digital assets while ensuring its exercise aligns with the overall interests of society. Only then can crypto assets evolve from technological experiments into mature economic infrastructure.