The remarks made by a popular executive from a Bitcoin development company, advocating for large financial institutions to take custody of Bitcoin, disappointed the cryptocurrency community.
MicroStrategy CEO Michael Saylor is now at the center of strong criticisms after saying that it would be better for Bitcoin to be in the custody of “too big to fail” banks than self-custody.
The Contentious Remark
Saylor, in a podcast interview, dissuaded investors and traders from the Bitcoin self-custody approach while putting forward the idea of custodianship through large financial institutions like banks.
He believes that large and established financial institutions can better serve Bitcoin holders because they are designed to secure financial assets.
In the said interview, Saylor debunked the possibility of any government seizure of Bitcoin as a “trope”, saying that the risk of seizure increases when the crypto is being controlled by “a bunch of crypto-anarchists” who discard government authority and do not acknowledge taxes and reporting requirements.
Vitalik Buterin didn't like Michael Saylor's Bitcoin comments. Illustration: Darren Joseph; Photos: Shutterstock
He explained that unlike these “crypto-anarchists”, financial institutions follow legal and tax obligations, arguing that it lessens the chances of any government intervention.
Many analysts in the cryptocurrency space were surprised with Saylor’s stance and they find it hard to swallow the concept the executive is pushing.
BTCUSD trading at $66,265 on the 24-hour chart: TradingView.com
A ‘Batshit Insane’ Idea
Ethereum co-founder Vitalik Buterin lambasted Saylor for his controversial perspective on Bitcoin custody, saying that the idea is ‘batshit insane’.
Buterin strongly criticized banks taking custody of the coin, arguing that Saylor’s remarks are already outdated since there had been a lot of technological developments that transformed the “tradeoff space completely.”
I probably did more than most to spread the “mountain man” trope (btw I consider those remarks of mine outdated; snarks and AA changed the tradeoff space completely), and I’ll happily say that I think @saylor‘s comments are batshit insane.
He seems to be explicitly arguing for a…
— vitalik.eth (@VitalikButerin) October 22, 2024
The Ethereum co-founder does not believe that the approach being pushed by Saylor intended to protect crypto will prosper, saying that this is not what cryptocurrency is all about.
“There’s plenty of precedent for how this strategy can fail,” he added.
Bitcoin Community Refutes The Idea
Bitcoin proponents, who are strong advocates of self-custody, do not buy into the idea and reasoning raised by Saylor in adopting Bitcoin custodianship through the banks.
21st Capital co-founder Sina G said that the idea could relegate Bitcoin into an “investment petrock” and warned that it could lead to the stoppage of the crypto being used as a currency.
Sina G called Saylor’s perspective “spooky”, seeing him as the mouthpiece of the government and financial institutions.
If you’re surprised by Saylor’s recent comments then you haven’t been paying attention. https://t.co/Tf7CDM4LqT pic.twitter.com/GTAr2oXjEC
— Jameson Lopp (@lopp) October 21, 2024
Jameson Lopp, Chief Security Officer at the Casa HODL, said that the bank’s custody of BTC has long-term implications for the cryptocurrency space.
Lopp argued that centralizing the digital monies increased the risk of loss and seizure, raising the possibility that Bitcoin users could become disenfranchised due to governance activities such as trading forks and running nodes.
He emphasized that self-custody is significant to further strengthen and enhance the network and is not merely a concern for individual holders.
Featured image from Shutterstock, chart from TradingView