I see this come up again and again.
Not your keys, not your bitcoin.
And then a explanation, usually about how they could steal your coins from a custodial wallet or exchange(theft). How the coins maybe don’t even exist(fraud) or how you are not in control of them.
I feel like these arguments are not convincing everyone. Big exchanges like Coinbase have a excellent track record of not loosing or stealing coins. Btc on robinhood might just be a entry in a database, but so are stocks these days. Every reasonable custodian will follow every lawful order of yours to the letter etc.
The issue in my POV nowadays is political. Above I mentioned how every reasonable custodian will follow every lawful order of yours to the letter, but that’s just half the story. They will follow every lawful order, not just yours. And who decides what’s lawful? Politicians.
This can have tax implications(transaction tax). Or regulatory implications(only allowing transfers to kyc aml known wallets). The more people have custodial crypto the more tempting such regulation becomes.
This became very clear to me with the rise of a political party in my country which I hold not much trust in(not a US thing). With non custodial crypto I can vote with my feet if need be, my bitcoin will be wherever I am. With custodial crypto … I have to worry. Will they allow outgoing transfers? Do I have to pay a exit tax? What if it gets seized due to some crisis because it’s over whatever amount your allowed to own(see greece and financial crisis).
With custodial crypto you are dependent on the justice of future governments. 300k in crypto? 10% solidarity surcharge. Living in a self used house worth 400k? You are fine. They decide what is fair and just, like they do now. I can’t visit my friends, because that spreads corona and my rights don’t matter. But visiting 15 different families every day because my boss wants to earn money is fine because it’s work.
If you don’t hold your keys… you depend on the sense of justice and freedom of others instead of your own. And you risk the most basic right of them all, to go away from where you are no longer welcome.