Crypto users must be able to trust their wallets more than their bank

Banking and finance have been transformed this century by peer-to-peer or decentralized finance (DeFi), cryptocurrencies, smart contracts and more, with many fintech innovations allowing users to send, receive and invest money instantly. Digital assets represent a growing market — one that is feeling its way toward the future.

In the crypto market, there's an emerging trend away from institutions that manage customers' money and data in favor of self-custodial platforms. At the heart of this movement is customers' desire to minimize friction and make managing their cash and data as simple and intuitive as possible. They want to feel in control, especially in light of the recent collapse of top financial institutions, so the hype around decentralization is not a surprise.

But despite the promise of these solutions, problems remain. For some, instead of fixing the centuries-old flaws of traditional finance — fraud, market rigging, and rug pulls among them — the promised "people's system" has merely replicated some of them. These problems need to be rectified to embrace the new financial world fully.

New regulatory frameworks are not necessarily the crypto industry's savior. Hastily enacted regulations could force companies and consumers to do business offshore, where there is potentially less oversight and even greater potential for more fraud and deception. And regulatory overreach could spell a disaster for crypto businesses and for consumers.

To realize the full potential of crypto, we need more than a reasonable regulatory framework. We need a new class of solutions that employ robust security measures, with appropriate safeguards in place that can satisfy regulators' and users' concerns. These are imperative in the wake of weekly headlines about people losing millions to a scam. Finding common ground will lower risk for regulators and lead to more adoption overall.

As noted earlier, distrust of institutions is prompting many crypto users to move from custodial wallets to self-custodial ones. In this new paradigm of self-reliance, people no longer feel able to rely on "trusted" third parties of any kind — whether they are crypto exchanges, banks, or other institutions — to safeguard their digital assets.

Instead, many now want to assume full responsibility for their wallet keys/passphrases and be able to authorize transactions from their own devices. Looking to utilize an identity management solution to enable a safer crypto market, crypto users can turn to a platform like Solidus Labs or even the latest technology from WorldCoin. Such solutions protect users throughout their entire crypto journey from onboarding through a transaction.

Insurance is a common safety net adopted across numerous industries. Today, we have companies like Evertas and Coincover, who are offering crypto insurance to safeguard investments, adding a much-needed layer of protection against common threats.

Crypto insurance is a great way to mitigate the fact that blockchain transactions are finite by nature, meaning that if a transaction happens, you cannot reverse it. Mainstreaming crypto insurance products will enhance the ability of users to safely store and transact in digital assets.

While hardcore crypto enthusiasts might know what they are doing, the average consumer is not equipped to deal with Web 3.0 apps, smart contracts, and confusing interfaces with the same degree of understanding.

Operating in a new and complex environment can be intimidating. Companies like Alterya and Redefine help users identify, understand, and ultimately address risks, and these kinds of tools are quickly becoming imperative for dealing in the crypto market. For those who are further along in their financial journey, but still remain hesitant to dive in, companies like Hexagate and Blockfence are helping to prevent interactions with fraudulent smart contracts via pre-transaction analysis.

If customers have better risk analysis when interacting with these products, they will have more confidence making transactions. The stakes are high, because failure means that different legal and regulatory systems will try to fill the gap — and for the reasons mentioned above that's not a good thing.

Remember: digital finance must evolve toward low-friction, intuitive and safe solutions to win both consumer trust and market share.

To the average user, the risk of falling victim to a crypto scam remains high — especially when local legal systems are ill equipped to retrieve funds lost to international criminals. The only viable solution is to build a new generation of products and services that make Web 3.0 safer, more intuitive, and user-friendly.

So, there is an urgent need for a marriage of fintech and cybersecurity that delivers on the promise of the new financial world: to make our lives simpler, faster, easier, and more secure.