As self-custody becomes a mainstream topic in crypto’s newest growth cycle, Binance founder Changpeng Zhao (CZ) has stepped in to restate what he believes is the most important rule for anyone storing digital assets: a hardware wallet should never allow the private key to leave the device under any circumstances.
His remarks follow a series of public discussions in Dubai, where wallet security has become a focal point amid growing retail participation.
Key Takeaways
CZ says a hardware wallet is insecure if the private key can ever leave the device.
His warning comes as self-custody adoption rises and attackers increasingly target seed phrases and backups.
Industry experts widely support the view that true security requires absolute private-key isolation.
A Clear Warning, Not a Recommendation
CZ’s comments came in response to an industry executive on X, where he referenced a hardware wallet he had recently examined.
Rather than treating the device’s security features as a selling point, he used the moment to re-center debate around what he calls the baseline requirement for self-custody. According to him, a wallet that cannot guarantee permanent, on-device key isolation should be treated with suspicion, regardless of brand, reputation, or convenience features.
The message was not framed as a casual preference but as a rule that should not be compromised. CZ’s stance is that the entire logic of a hardware wallet collapses the moment a private key becomes exportable, readable by firmware, or exposed to an external device during transaction signing.
Why Key Isolation Matters More Than Ever
The timing of his warning is significant. The 2025 market cycle has pushed a record number of new users toward non-custodial storage, including hardware devices and emerging keyless-wallet solutions. With this expansion has come an increase in sophisticated attacks targeting seed phrases, cloud backups, clipboard data, and recovery procedures—weak points that hackers exploit far more often than breaking hardware itself.
CZ has long been a proponent of self-custody, yet he has consistently acknowledged its pitfalls. Even before this latest warning, he has cautioned that mismanaging seed phrases can be as dangerous as leaving funds on an exchange. His latest remarks reinforce the idea that while self-custody empowers users, it also raises the stakes, placing greater responsibility on individuals to understand how their wallet handles private keys.
Industry Standards and Best Practices Align With CZ’s View
Although CZ’s comments gained attention because of his visibility in the industry, the principle he highlighted is consistent with longstanding guidance from cybersecurity specialists. Certified hardware wallets are built around secure-element chips that prevent private keys from being copied or leaked. Signing occurs entirely within the device, and only the signature—not the key—interacts with external applications.
Educators and researchers—including figures like Andreas Antonopoulos—have spent years repeating similar points. Their position has been simple: if a user cannot fully control their private key, they do not truly own their digital assets. CZ’s hardline version of that philosophy simply narrows the language to one decisive technical rule: the key must never leave the device, not even once.
A Debate Renewed at Binance Blockchain Week
The discussion around wallet security gained further traction after CZ and well-known gold advocate Peter Schiff participated in a widely viewed debate in Dubai. While the two argued over what should back digital money and how value should be stored, the conversation ultimately circled back to the vulnerabilities of digital systems and the importance of securing private keys.
CZ’s renewed emphasis on hardware wallet isolation appears to stem from that broader dialogue about risk, responsibility, and the evolving expectations of crypto users entering the ecosystem for the first time.
