Vitalik Buterin criticizes Michael Saylor’s Bitcoin custody proposal, emphasizing the importance of self-custody and decentralization in the crypto community.
Vitalik Buterin has taken a swipe at MicroStrategy CEO Michael Saylor over his comment regarding Bitcoin custody. The proposal by Saylor that large institutions get involved in holding cryptocurrency has received a lot of backlash within the Bitcoin community as they see it to be against what the digital asset really stands for.
In an interview on Markets with Madison, Saylor mentioned that when Bitcoin BTC $76 327 24h volatility: 8.1% Market cap: $1.52 T Vol. 24h: $67.31 B is in the hands of crypto-anarchists, who are neither regulated entities nor acknowledge government taxes or reporting requirements, it increases the risk of seizure. He suggested that large institutions are more suitable for handling Bitcoin custody due to their size and experience.
Vitalik Buterin and Jameson Lopp Defend Self-Custody
Saylor’s remark has raised many eyebrows. Buterin didn’t hold back when commenting on a post by Jameson Lopp, calling Saylor’s statement “batshit insane.” Buterin explained that Saylor’s vision seems to advocate for regulatory capture to protect crypto.
In other words, having large, regulated companies like BlackRock and Fidelity hold crypto could lead to government officials and agencies protecting those companies’ interests since they have investments in those entities. However, he believed that the strategy could be used for many reasons, and to him, it was totally different from the core principles of crypto.
The Ethereum founder revealed that the new technologies, such as zk-SNARKs and account abstraction (AA), have further improved his mindset about self-custody.
Bitcoin custody firm Casa’s chief security officer, Jameson Lopp, also expressed his opinion. He listed a few important aspects of self-custody. According to Lopp, centralizing cryptos into the hands of a few could lead to a systemic risk of loss or seizure. Lopp noted that if people give up their Bitcoin holdings to a third party, they lose direct influence in governance activities.
Lopp also added that if most users rely on third parties for transactions, there will be less incentive to improve Bitcoin’s permissionless and decentralized on-chain scaling.
Industry Leaders Warn of the Risks of Centralized Bitcoin Custody
Saylor has also faced criticism from other prominent figures in the crypto industry. Simon Dixon interpreted Saylor’s comments as being tied to MicroStrategy’s business strategy, speculating that the company may be planning to become a Bitcoin bank. Additionally, John Carvalho accused Saylor of attempting to leverage Bitcoin as much as possible for personal gain while recognizing its value. He alleged that Saylor was exploiting 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.
“It is you that is openly exploiting the system beyond what any cryptoanarchist Bitcoiner would attempt, no? So, I remain objectively confused, before needing to pass any judgment at all. 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!” he wrote.
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