Michael Saylor Calls On-Chain Proof-of-Reserves Risky and Unfit for Crypto Platforms

Highlights:

• Saylor says proof-of-reserves weakens security for custodians, investors, and issuers.
• Many crypto firms use proof-of-reserves to prove they cover customer deposits.
• Some in the crypto community see Saylor’s proof-of-reserves doubts as a red flag.

On May 27, during the Bitcoin 2025 Las Vegas conference, Michael Saylor, Executive Chairman of Strategy (formerly MicroStrategy), stated that institutional on-chain Proof-of-Reserves is not a good idea. Proof-of-reserves allows anyone to see a company’s crypto holdings on the blockchain. Many crypto exchanges use this method to prove they have enough crypto to cover customer deposits. Saylor said the method is insecure and could reduce the overall security of issuers, custodians, exchanges, and investors.

He stated:

The current, conventional way to publish proof of reserves is an insecure proof of reserves. It actually dilutes the security of the issuer, the custodians, the exchanges and the investors. It’s not a good idea, it’s a bad idea.” 

Saylor Doubts Proof-of-Reserves as Right Move for Crypto Firms

Saylor recognized that the industry had gained lessons from the failures of FTX and Mt. Gox but suggested that proof-of-reserves is not the right step for institutions. He mentioned that experts in security would likely disagree with publicly sharing all wallet addresses, as it could allow easy tracking of transactions. Saylor argued that it would be like publishing your kids’ bank accounts and phone numbers.

To support his view, the Strategy founder recommended using AI to study the risks of sharing wallet addresses. He said AI would produce many pages listing security issues and possible long-term dangers for a company. 

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

After FTX collapsed in November 2022, many crypto exchanges, custodians, and fund issuers began sharing proof-of-reserves to show transparency and confirm they have enough assets to cover customer deposits. Kraken, OKX, Binance, and Bitwise are some of the crypto firms that have embraced this transparency practice. Still, Saylor pointed out that proof-of-reserves usually reveals only the assets held, not the company’s debts. 

He suggests better financial reports and regular audits, not just Proof of Reserves. He says it is important to know the full financial health of an exchange. Checking only asset balances can be misleading. Saylor’s Strategy holds the most BTC of any firm. It has 576,230 Bitcoin worth $62.6 million. The next biggest holder is MARA Holdings, a Bitcoin mining company. MARA has 48,137 BTC, as per the BitcoinTreasuries.NET.

Saylor’s Comments Spark Concern in the Crypto Community

Following Michael Saylor’s comments, the crypto community expressed various opinions. Some raised doubts about his stance on transparency in the cryptocurrency space. Although many support Saylor’s Bitcoin investments, his remarks on proof-of-reserves caused concern. Several Twitter users viewed this as a red flag. Bitcoin O.G. Stefan Jespers, known as “Whale Panda” on X, was among those who criticized Saylor after his recent comment. “Talking about a major red flag. He compares it to publishing bank accounts and phone numbers…The whole point of Bitcoin is its transparency,” he said. 

Talking about a major red flag.
He compares it to publishing bank accounts and phone numbers…
The whole point of Bitcoin is its transparency.https://t.co/FgVhAvQdiz

— WhalePanda (@WhalePanda) May 27, 2025