The concept of paper bitcoin, which encompasses the existence of bitcoin held by institutional investors not backed by actual BTC tokens, has risen again in the current market context.

While computationally, bitcoin has been programmed to have a market capitalization limit of 21 million, the inclusion of institutions and custodians has created concerns in the community on this end, supported by the price action deemed suspicious by some.

Stefan Jespers, also known as Whalepanda, recently touched on the subject, claiming that current market dynamics supported the idea of a bitcoin fractional reserve.

On social media, he stated:

We had another $1 billion of inflows in ETFs, Saylor saying he bought more and price is down again for the week. We also had more Bitcoin treasury companies and the price doesn’t move at all. Still people are in denial about all the paper BTC out there.

Nonetheless, legendary bitcoiner Adam Back criticized this idea, calling for evidence of this phenomenon or how this theory could be supported.

This is not the first time that paper bitcoin allegations have surged due to disappointing price action. The first complaints of this issue date back to May, since former Monero maintainer Riccardo Spagni criticized Strategy’s lack of transparency regarding its cryptocurrency holdings.

Coinshares, a cryptocurrency investment product firm, raised alarms on the lack of transparency of bitcoin treasury companies, stressing that “if paper bitcoin proliferates without robust verification, we risk returning to a world where market participants can’t confidently verify whether assets are backed 1:1, which would contradict bitcoin’s founding ethos.”

In a recently published report, the firm states that, unlike Tokyo-based Metaplanet, no companies adopting bitcoin as a Treasury asset offer an official way to verify their holdings onchain.

It concluded that while the threat of paper bitcoin is real, by holding institutions accountable, “we can ensure that bitcoin remains what it was always meant to be: trustless, auditable, and radically transparent.”

Read more: Paper Bitcoin? Community Raises Concerns About Custody Providers Engaging in Bitcoin Fractional Reserve Practices

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