Boy 3 year old touching self??

My 3 year old boy is touching himself. He'll disappear and I'll find him underwear down. I'll ask him what he's doing and he says "playing with my penis".

I of course don't want him to feel shame so I just say we do that when we're in the bathroom going potty.

He's currently potty training and his daddy taught him to "hold his penis down" because he kept spraying everywhere. I'm guessing this is how it started.

I can tell there's some sense of I shouldn't do this because he's always hiding and acts caught in the act so to speak. I've never made a huge deal but I know it's upset his dad a few times.

1. Is this normal? Just a phase?

2. What should I do or say when he does it?

Thanks for your kind and thoughtful responses.