Bitcoin's ( BTC-USD ) supply on cryptocurrency exchanges has dropped to its lowest level since February 2018 as heightened regulatory scrutiny of the space seemingly drives traders to move their BTC to self-custody, according to on-chain data from market intelligence platform Santiment. Some 6.4% of bitcoin ( BTC-USD ) supply left exchanges after the U.S. Securities and Exchange Commission sued Coinbase Global ( COIN ) and Binance , accusing the major exchanges of offering unregistered securities. Supply has been pulling back since the 16.0% peak in 2020, the data showed, suggesting that traders feel more comfortable holding their bitcoins ( BTC-USD ) in self-custody wallets, which allow users to store their tokens and act as their own banker instead of relying on off-chain exchanges. "As long as these #SEC lawsuits loom, this trend should continue," Santiment wrote in a Twitter post Tuesday evening. The multibillion-dollar demise of Sam Bankman-Fried's FTX ( FTT-USD ) exchange late last year, as well as other high-profile meltdowns, likely helped to boost the popularity of self-custody wallets. Meantime, in its first-quarter financial results published last month, Coinbase ( COIN ) saw its average assets under custody jump 25% to $52.3B from the prior quarter. More on bitcoin and crypto exchanges Why The SEC's Coinbase Lawsuit Is Great For Bitcoin SEC versus crypto: Regulatory clarity or confusion? Centralized crypto exchanges' trading volume plunges 40% in April, data show Bitcoin climbs as Hong Kong OK's crypto trading for retail investors
