Vitalik Buterin, co-founder of Ethereum, criticized Michael Saylor, CEO of MicroStrategy, for suggesting that Bitcoin enthusiasts should entrust their BTC custody rights to large financial institutions.
Buterin is the latest critic of Saylor, who supports Bitcoin custody through traditional banks instead of self-custody, which is favored by many cryptocurrency stakeholders. Saylor made this suggestion during an interview with Madison Market on October 20.
It is worth mentioning that Saylor has always been an advocate for self-custody, believing that it prevents large custodians from accumulating too much power. However, his recent support for custody through large financial institutions has shocked many people and received severe criticism.
Buterin criticized Saylor’s suggestion as “extremely foolish.” The Ethereum co-founder accused Saylor of advocating regulatory capture to protect cryptocurrencies. He cited some controversial comments from Saylor’s speech, which indicated that entrusting Bitcoin custody to large financial institutions like BlackRock and Fidelity Investments could protect the industry because most law enforcement agencies and legislators hold stakes in these entities. Saylor believes that these regulatory agencies will ensure the protection of these institutions, which he believes may extend to the cryptocurrency industry.
In response, Buterin asserted that there are many examples that show this strategy will not produce the expected results. Furthermore, he emphasized that Saylor’s suggestion goes against the core principles of cryptocurrencies, which prioritize decentralization and financial freedom.
Other cryptocurrency stakeholders also criticized Saylor’s suggestion. Yesterday, Jameson Lopp, co-founder of Bitcoin custody company Casa, criticized Saylor’s actions and highlighted four long-term negative impacts of the proposal. He argued that convincing people to trust third-party custodians could increase systemic risks, leading to asset seizures and losses. Casa executives also stated that this move could deprive many people of their rights to actively participate in governance. Additionally, Lopp stated that centralizing Bitcoin custody in large financial institutions could hinder innovation, as these institutions do not care about advanced cryptographic features. Lastly, the co-founder of Casa expressed that entrusting Bitcoin custody rights to large financial institutions would reduce the scale of permissionless innovation.
Erik Voorhees, founder of ShapeShift, stated that Saylor should face criticism from cryptocurrency enthusiasts. According to him, self-custody of Bitcoin is crucial, and he added that the fundamental properties of Bitcoin stem from this concept.
Saylor faced criticism for his comments on self-custody, as he should have. Self-custody of digital asset is crucial. All important properties of Bitcoin stem from this property. This does not mean all Bitcoin holders should… [link to full article]
— Erik Voorhees (@ErikVoorhees) October 22, 2024