Michael Saylor, the executive chairman of Strategy, formerly known as MicroStrategy, has voiced concerns over the idea of institutions posting on-chain proof-of-reserves, citing potential security risks. Speaking at a May 26 event during the Bitcoin 2025 conference in Las Vegas, Saylor expressed his reservations about the current method of publishing proof of reserves, labeling it as insecure and potentially detrimental to the security of issuers, custodians, exchanges, and investors.
Saylor's stance on this matter came to light when he was asked by Blockware Solutions head analyst Mitchell Askew whether Strategy had plans to publish its proof-of-reserves. Saylor's response, deeming it a "bad idea," has stirred discussions within the crypto community.
Proof-of-reserves is a common practice among crypto exchanges to demonstrate that they possess adequate reserves to cover customer deposits. This measure is also utilized by other entities such as crypto-tracking exchange-traded funds to verify their holdings. Despite the prevalence of proof-of-reserves in the industry, Saylor cautioned against its widespread adoption, suggesting that it may not be the most secure approach for institutions.
The collapse of crypto exchanges like FTX and Mt. Gox has prompted many industry players to embrace proof-of-reserves as a means of enhancing transparency and ensuring the solvency of their operations. Following FTX's downfall in November 2022, a growing number of crypto exchanges, custodians, and ETF issuers have opted to disclose their reserves to instill confidence in their stakeholders.
While acknowledging the importance of transparency, Saylor emphasized the limitations of proof-of-reserves, pointing out that it only reveals one side of the equation – what the company holds – without considering its liabilities. This perspective underscores the complexity and nuances involved in demonstrating financial soundness in the crypto space.
Strategy stands out as the world's largest corporate holder of Bitcoin, boasting 576,230 Bitcoin valued at $62.6 million on its balance sheet. The firm's significant Bitcoin holdings underscore its confidence in the digital asset as a long-term investment strategy. With over 110 publicly traded companies worldwide also having invested in Bitcoin, the cryptocurrency continues to garner interest as a legitimate asset class.
In conclusion, Saylor's cautionary remarks regarding on-chain proof-of-reserves shed light on the ongoing debate surrounding transparency and security in the crypto industry. As stakeholders navigate the evolving landscape of digital assets, striking a balance between accountability and safeguarding sensitive information remains a key consideration for institutional adoption.
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