TLDR

MicroStrategy’s Michael Saylor calls onchain proof-of-reserves a “bad idea” that creates security risks for institutions
Saylor says publishing wallet addresses makes companies vulnerable to tracing and security breaches
He argues proof-of-reserves only show assets held, not liabilities owed to customers
Many crypto exchanges adopted proof-of-reserves after FTX collapsed in November 2022 for transparency
Strategy holds 576,230 Bitcoin worth $62.6 billion, making it the world’s largest corporate Bitcoin holder

MicroStrategy executive chair Michael Saylor spoke against institutions publishing onchain proof-of-reserves during a May 26 event at the Bitcoin 2025 conference in Las Vegas. He called the practice a “bad idea” that increases security risks for companies holding cryptocurrency.

Saylor explained that current proof-of-reserves methods are insecure and harm multiple parties. “It actually dilutes the security of the issuer, the custodians, the exchanges and the investors,” he said during the event.

The executive declined to answer when asked if MicroStrategy would publish its own proof-of-reserves. Blockware Solutions analyst Mitchell Askew posed the question during the conference discussion.

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

— Mitchell (@MitchellHODL) May 27, 2025

Proof-of-reserves are transparency tools that verify companies hold enough crypto assets to cover customer deposits. Crypto exchanges and fund managers commonly use them to show they have sufficient reserves.

These tools became popular after major exchange collapses like FTX and Mt. Gox. The crypto industry adopted them to rebuild trust with customers and investors.

Saylor acknowledged the industry learned from these failures but disagreed with proof-of-reserves as a solution. He said institutional security experts would not recommend publishing wallet addresses that allow tracing.

“No institutional-grade or enterprise security analyst would think it’s a good idea to publish all of the wallet addresses,” Saylor stated. He warned this creates vulnerability by making companies traceable through blockchain analysis.

The MicroStrategy chair suggested using artificial intelligence to identify security problems with publishing wallet addresses. He claimed AI would generate “50 pages of security problems” when asked about the risks.

Growing Adoption After FTX Collapse

Many crypto companies started publishing proof-of-reserves after FTX collapsed in November 2022. The exchange’s failure highlighted the need for transparency in crypto custody and operations.

Major exchanges including Binance, Kraken, and OKX now publish regular proof-of-reserves reports. Crypto asset manager Bitwise also adopted the practice for its exchange-traded funds.

However, Saylor pointed out that proof-of-reserves show only one side of company finances. They reveal what companies hold but not what they owe to customers or creditors.

This incomplete picture means proof-of-reserves may not provide full transparency about a company’s financial health. Companies could hold sufficient assets while having hidden liabilities.

MicroStrategy’s Bitcoin Holdings

MicroStrategy remains the world’s largest corporate Bitcoin holder with 576,230 Bitcoin on its balance sheet. The company’s holdings are worth approximately $62.6 billion at current prices.

Bitcoin mining firm MARA Holdings ranks second with 48,137 Bitcoin according to BitcoinTreasuries.NET. More than 110 publicly traded companies worldwide now hold Bitcoin as a treasury asset.

MicroStrategy has been aggressively buying Bitcoin since 2020 under Saylor’s leadership. The company recently purchased 4,020 additional Bitcoin as the cryptocurrency’s price briefly topped $110,000.

The post MicroStrategy CEO Says Proof-of-Reserves Create Security Risks for Bitcoin Companies appeared first on Blockonomi.

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Filed under: Bitcoin - @ May 27, 2025 8:25 am