Key Points
- Vitalik Buterin criticizes Michael Saylor’s suggestion for institutional control over Bitcoin custody.
- Industry leaders express concerns over the risks of centralized Bitcoin custody.
Vitalik Buterin, co-founder of Ethereum, has criticized MicroStrategy CEO Michael Saylor’s comments on Bitcoin custody. Saylor’s suggestion that large institutions should be involved in cryptocurrency custody has sparked controversy within the Bitcoin community, as it contradicts the fundamental principles of the digital asset.
During an interview on Markets with Madison, Saylor suggested that the risk of seizure increases when Bitcoin is held by crypto-anarchists who neither adhere to government taxes nor reporting requirements. He proposed that large institutions, due to their size and experience, are better suited to handle Bitcoin custody.
Buterin and Jameson Lopp Advocate for Self-Custody
Buterin responded to Saylor’s remarks, calling them “batshit insane.” He argued that Saylor’s vision appears to advocate for regulatory capture to safeguard crypto. In essence, he suggested that having large, regulated firms like BlackRock and Fidelity hold crypto could lead to government officials and agencies protecting these companies’ interests, as they have investments in them. However, Buterin believes that this strategy deviates significantly from the core principles of crypto.
Buterin also mentioned that new technologies such as zk-SNARKs and account abstraction (AA) have further reinforced his belief in self-custody. Jameson Lopp, chief security officer at Bitcoin custody firm Casa, also voiced his opinion, highlighting the importance of self-custody. He warned that centralizing cryptos could lead to a systemic risk of loss or seizure and that individuals lose direct influence in governance activities when they hand over their Bitcoin holdings to a third party.
Risks of Centralized Bitcoin Custody
Saylor’s comments have also drawn criticism from other key figures in the crypto industry. Simon Dixon interpreted Saylor’s remarks as being linked to MicroStrategy’s business strategy, speculating that the company might be planning to become a Bitcoin bank. John Carvalho accused Saylor of exploiting the system for personal gain while acknowledging Bitcoin’s value. He alleged that Saylor was manipulating the system in a way that no crypto-anarchist Bitcoiner would.
Carvalho further emphasized that Saylor, given his position and strategy, cannot afford to ignore the risks of Bitcoin custodianship and the potential for government seizure. He wrote, “It is surely folly for you of all people, of all strategies, to dismiss the risk of Bitcoin custodianship and the government risk of seizure. Sir, your goal is Public Target #1!”
