Michael Saylor: On-chain reserve proof is a "bad idea" and may pose security risks.

CN
1 month ago

The executive chairman of Strategy (formerly MicroStrategy), Michael Saylor, stated that the issuance of on-chain proof of reserves by institutions is a "bad idea" and could pose security risks.

"Currently, the traditional way of issuing proof of reserves is an insecure proof of reserves," Saylor said when asked about institutions adopting transparency measures during an event at the Bitcoin 2025 conference in Las Vegas on May 26.

"It actually undermines the security of the issuer, custodian, exchange, and investors. This is not a good idea; it is a bad idea."

When Blockware Solutions chief analyst Mitchell Askew asked if Strategy would issue proof of reserves, Saylor did not answer whether the company would do so.

I asked @saylor if @MicroStrategy has any plans to publish on-chain proof of reserves. His answer will SHOCK you: “It’s a bad idea.” - Security Risk - Irrelevant without also having Big 4-audited liabilities. Check it out 👇 pic.twitter.com/tIxUckgbEp

Proof of reserves is common among cryptocurrency exchanges to verify that companies hold enough cryptocurrency reserves to cover customer deposits. They can also confirm that other entities, such as cryptocurrency-tracking exchange-traded funds, hold the necessary amount of cryptocurrency for the funds.

Saylor acknowledged that the industry has learned a lot from the collapses of cryptocurrency exchanges FTX and Mt. Gox but stated that proof of reserves is not the right measure for institutions.

"No institutional or enterprise security analyst would think that publishing all wallet addresses is a good idea, as it allows you to be tracked back and forth."

"Go find AI, put it into deep thinking mode, and ask it, 'What security issues arise from publishing wallet addresses?' and 'How could this potentially undermine the security of the company over time?'" Saylor said, adding that it would write out "50 pages of security issues."

After the collapse of FTX in November 2022, many cryptocurrency exchanges, custodians, and exchange-traded fund issuers began publishing proof of reserves to establish transparency and demonstrate that they hold sufficient assets to support customer deposits.

Cryptocurrency exchanges such as Binance, Kraken, and OKX, as well as cryptocurrency asset management company Bitwise, are industry participants that have adopted this transparency measure.

However, Saylor pointed out that proof of reserves typically only shows one side of the picture—what the company holds—rather than what they owe.

Saylor's Strategy is the world's largest corporate holder of Bitcoin, with 576,230 Bitcoins worth $62.6 million on its balance sheet, followed by Bitcoin mining company MARA Holdings, which holds 48,137 Bitcoins, according to data from BitcoinTreasuries.NET.

Over 110 publicly listed companies globally have purchased and hold Bitcoin.

Related: Strategy increases its holdings by 4,020 BTC as Bitcoin (BTC) briefly breaks $110,000

Original article: “Michael Saylor: On-chain proof of reserves is a ‘bad idea’ and could pose security risks”

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