The Risks of Centralization in Crypto Security: Ledger's Multisig Controversy and Investor Implications

The crypto industry has long prided itself on decentralization as a core tenet, yet 2025 has seen a growing tension between this ethos and the profit-driven strategies of infrastructure providers. Ledger, a pioneer in hardware wallets, has become a focal point of this debate with its controversial rollout of a native multisig feature. The move, which centralizes transaction approval through Ledger's backend and introduces a fee structure criticized as exploitative, has sparked a broader conversation about the risks of corporate monetization in crypto security. For investors, the implications are clear: the shift toward centralized models threatens to erode trust, compromise user autonomy, and create regulatory and market risks that could destabilize the industry's long-term growth.

Ledger's Multisig Controversy: A Departure from Decentralized Principles

In 2025, Ledger introduced a native multisig feature alongside its Nano Gen5 device and a revamped Ledger Wallet app. While the update aimed to streamline multi-signature transaction approvals, it relied entirely on Ledger's backend infrastructure, bypassing third-party tools like Specter or Sparrow, according to The Block report (The Block report). This shift raised immediate red flags. Critics highlighted a fee structure that includes a flat $10 charge for standard transfers and a 0.05% fee for ERC-20 token transactions, in addition to standard network gas costs - a point repeatedly emphasized in the coverage. Security researcher pcaversaccio from SEAL-911 condemned the model as a "cash cow," arguing it transforms multisig users into a revenue stream. Developer Sarnavo from the Avalanche ecosystem further criticized the closed-source nature of the interface, which prevents users from verifying how data is handled during signing.

The backlash is compounded by the exclusion of older models like the Nano S, a device that introduced millions to self-custody. By leaving these users behind, Ledger has alienated a segment of its customer base that values affordability and accessibility, a criticism also noted in The Block report. This move has been interpreted as a departure from Ledger's cypherpunk roots, with pcaversaccio noting the irony of Ledger positioning itself as a decentralized solution while creating a centralized bottleneck.

Broader Industry Trends: Centralization as a Monetization Strategy

Ledger's actions are not an isolated incident but part of a broader industry trend. In 2025, crypto infrastructure firms have increasingly prioritized centralized models to enhance security, comply with regulations, and generate revenue. For example, Hyperliquid allocated $644 million in buybacks-nearly half of the year's total $1.4 billion in crypto buybacks-demonstrating how platforms use token repurchases to stabilize prices and signal confidence, according to a CoinGecko report (CoinGecko report). Similarly, companies like BitGo, Coinbase Custody, and Anchorage Digital have adopted institutional-grade security measures, including multi-party computation (MPC) and federal charters, to attract high-net-worth individuals and institutional clients, as outlined in the CitizenX guide (CitizenX guide). These platforms often charge premium fees for insurance, compliance tools, and multi-signature workflows, further entrenching centralized control, a trend highlighted in a CoinCodex roundup (CoinCodex roundup).

Regulatory shifts have also accelerated this trend. The U.S. Commodity Futures Trading Commission (CFTC) is expected to oversee spot crypto markets as commodities, while the SEC will regulate tokens classified as securities - a bifurcation explored in Coinotag coverage (Coinotag coverage). This bifurcation creates a framework where centralized custodians can operate under clear guidelines, offering services that align with traditional finance's risk-averse priorities. However, this alignment comes at the cost of decentralization, as platforms prioritize compliance and profit over user sovereignty.

Investor Implications: Balancing Profit and Principle

For investors, the centralization of crypto infrastructure presents both opportunities and risks. On one hand, centralized custodians offer enhanced security, insurance, and regulatory clarity, which can attract institutional capital and stabilize markets. On the other, the erosion of decentralized principles risks undermining the trust that underpins crypto's value proposition. If users perceive platforms like Ledger as prioritizing profit over privacy, adoption could stall, particularly among retail investors who value self-custody - a concern raised in The Block coverage.

Moreover, regulatory scrutiny looms large. The CFTC's potential oversight of spot markets and the SEC's focus on securities classification could force centralized platforms to navigate complex compliance requirements, increasing operational costs and reducing margins, as discussed in Coinotag coverage. For example, Coinbase Custody's integration with traditional banking services and its public company status make it a prime candidate for regulatory scrutiny, which could impact its ability to scale, per the CitizenX guide.

Investors must also consider the long-term viability of centralized models. While buybacks and fee structures provide short-term revenue, they may not sustain growth in a market that values decentralization. Projects like GMX, which repurchased 13% of its circulating supply and redistributed tokens to the community, have shown that decentralized governance can mitigate centralization risks - a dynamic described in the CoinGecko report. In contrast, Ledger's fee-heavy approach risks alienating users and developers, potentially stifling innovation.

Conclusion: A Tenuous Balance

The Ledger multisig controversy is a microcosm of the broader struggle between decentralization and corporate monetization in crypto infrastructure. While centralized models offer tangible benefits in security and compliance, they also introduce risks that could undermine the industry's foundational principles. For investors, the challenge lies in balancing these competing priorities-supporting innovation while safeguarding the trust that makes crypto unique. As the CFTC and SEC finalize their regulatory frameworks, the industry's ability to reconcile profit with principle will determine whether crypto remains a disruptive force or becomes another corner of finance dominated by centralized gatekeepers.