Corporate Bitcoin holdings concentrated in few custodians pose systemic risk

As Bitcoin’s (BTC) appeal as a treasury asset grows, Casa co-founder and CSO Jameson Lopp assessed that concentrating the amount of BTC on a few custody service providers might pose a systemic risk. 

Lopp said:

“The ‘Bitcoin Corporate Treasury’ narrative is a footgun if it’s not accompanied by the sovereignty via self custody narrative. Number Go Up folks are pitching companies to funnel their funds into a handful of trusted third parties. Systemic Risk Go Up.”

This is not the first time Lopp has raised concerns over custody this week. He previously questioned whether a third party would act as custodian in response to Pierre Rochard’s announcement of the Bitcoin Bond Company on April 7. The firm plans to invest up to $1 trillion in Bitcoin until 2046.

Rochard said there are already “lots of great institutional custodians to work with.”

Structural vulnerability with no easy fix

Based on Bitcoin Treasuries data, public and private companies currently hold 1,019,136 BTC in their treasuries. This amount equals 32.3% of the 3,150,000 BTC controlled by large entities and 5.13% of the total 19,849,381 BTC in circulation. 

The expanding role of custodians in managing institutional Bitcoin positions parallels patterns observed in traditional finance. 

Institutions typically rely on licensed custodians to meet internal governance requirements and regulatory compliance.

Strategy executive president Michael Saylor highlighted this usage in October 2024 when he said that the risk of government seizure of Bitcoins is lower when held with institutional custodians. Saylor said they “adhere to legal and tax obligations.” 

Saylor’s company has over 528,000 BTC in its treasury, divided between custodians such as Fidelity, Anchorage Digital, and Coinbase Prime.

Notably, these are the same services used by high-profile entities interacting with Bitcoin, such as BlackRock, which relies on Coinbase and recently added Anchorage.

While this may streamline treasury management, it creates single points of failure in a network built for distributed control, such as Bitcoin. 

However, the solution might not be as simple as self-custody. Kaia’s chairman Sangmin Seo highlighted that, although the lack of self-custody introduces risks, “sovereignty without usability creates friction.”

He concluded:

“Infra builders need to solve both, or we’re just rebranding old models.”

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