MicroStrategy founder Michael Saylor has stirred controversy within the crypto community by suggesting that Bitcoin holders should trust large financial institutions for custody, a sharp departure from his earlier stance advocating for self-custody. Saylor’s recent position, advocating for “too big to fail” banks like BlackRock and Fidelity as ideal Bitcoin custodians, has sparked heated debate.
Buterin Calls Saylor’s Custody Suggestion “Insane”
Ethereum co-founder Vitalik Buterin sharply criticized Saylor’s recommendation, calling it “insane” and incompatible with Bitcoin’s decentralized future. Buterin’s comments came after Casa’s chief security officer, Jameson Lopp, highlighted Saylor’s shift on October 22.
Buterin argued that relying on centralized institutions contradicts the core ethos of cryptocurrency. “There’s plenty of precedent for how this strategy can fail, and for me, it’s not what crypto is about,” Buterin remarked.
Saylor’s Shift from Self-Custody to Institutional Custodianship
In 2022, after the FTX collapse, Saylor had stressed the importance of self-custody to prevent the risks associated with centralized custodians. At the time, he warned that without the ability to hold one’s own Bitcoin, the decentralized nature of the network would be compromised.
However, during an interview on October 21, Saylor took a new position. He dismissed concerns about U.S. government Bitcoin confiscation—similar to the 1933 gold seizure—as “paranoid crypto-anarchist” thinking. He argued that large financial institutions are better suited to safeguard Bitcoin than individuals using hardware wallets.
Industry Backlash and Criticism of Saylor’s Change
Critics were quick to respond to Saylor’s shift. John Carvalho, CEO of Bitcoin payments firm Synonym, expressed disappointment, especially after Saylor’s earlier stance that “Bitcoin is hope” for those seeking financial independence. Simon Dixon, author of “Bank to the Future,” suggested Saylor’s change could be part of MicroStrategy’s strategy to offer collateralized loans using Bitcoin, positioning the company as a central player in Bitcoin custodianship.
The Debate Over Self-Custody and Decentralization
Buterin and others, like Jameson Lopp, argue that self-custody is crucial to maintaining Bitcoin’s decentralized ecosystem. They warn that concentrating Bitcoin ownership in a few large institutions could introduce risks like asset seizure and custodian misuse—risks Bitcoin was created to avoid.
For Buterin, Saylor’s approach poses dangers of regulatory capture, as relying on institutions with political and regulatory ties could undermine Bitcoin’s ability to operate independently of the traditional financial system. He believes this goes against the core principles of cryptocurrency—offering financial independence without relying on intermediaries.
Despite the backlash, some support Saylor’s view. Julian Figueroa, founder of “Get Based,” noted that while self-custody works for individuals, larger organizations may need institutional custodianship to manage their Bitcoin holdings.
However, many in the crypto community see Saylor’s shift as a betrayal of the decentralized values he once championed.
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