Michael Saylor calls onchain proof-of-reserves a ‘bad idea,’ rules it out for Strategy over security concerns

Responding to a question on whether Strategy (formerly MicroStrategy) has any plans to publish onchain proof-of-reserves during a  sideline event ahead of Bitcoin 2025 in Las Vegas on Monday night, the company's co-founder and executive chairman, Michael Saylor, said it posed security threats.

Many crypto firms broadly adopted proof-of-reserve measures after FTX's collapse to demonstrate onchain holdings for transparency. However, critics argue the approach falls short — often omitting audited fiat reserves, liabilities, and other key data needed to assess a firm's full financial health.

Saylor said that while the crypto industry learned from FTX's failure, he was unsure it had learned the things that the institutional community needs going forward, arguing that the current way to publish proof of reserves is insecure. "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," he said. "It's like publishing the address and the bank accounts of all your kids and your phone numbers of all your kids, and then thinking somehow that makes your family better. It doesn't make your family better."

Saylor suggested that no institutional grade or enterprise security analyst would recommend publicly sharing wallet addresses, as it enables full traceability of past and future transactions. Ask any AI to list the risks, and you'll get a book's worth of vulnerabilities, he claimed.

"You publish your wallet, that's an attack vector for hackers, nation-state actors, every type of troll imaginable," Saylor said. "And it creates so much liability that you should think twice before you do it. It's okay at a small level, but really, it isn't God's gift. I think people give too much credence to it on X."

Missing the other half of the equation

The Strategy co-founder also picked up on the lack of the liabilities side of the equation. "If you really want crypto security and you're maxi about this, my suggestion is buy bitcoin, self-custody your bitcoin. It's pretty freaking obvious, right? You should own the bitcoin yourself if that's what you want," Saylor said. "[But,] if you're going to be a securities investor, if you invest in securities, what you want is an institutional-grade proof of assets and proof of liabilities with them netted out. And the best practice is not to publish the wallet."

He argued that the gold standard for a bitcoin treasury company like Strategy is a Big Four auditor verifying both asset ownership and liabilities, ensuring no rehypothecation of bitcoin or hidden obligations and the results should be signed off by a public company's CFO, CEO, and board — all legally accountable under U.S. law — as Strategy does. "It's much better than simply a proof of reserves wallet," he said.

Institutional investors care far more about audited financials than proof of reserves — they want 10Ks, 10Qs, and legal accountability, not just a wallet balance, Saylor continued. In public markets, missing a 10K is a massive red flag while publishing a wallet means little without knowing the liabilities, and proof of reserves alone won't protect you from a meltdown, he said.

Could zero-knowledge proofs help?

Saylor said he was open to implementing proof of reserves at some point if it could be done with zero-knowledge proofs that fully obscure wallet addresses. But even then, it would need to be cleared with custodians, exchanges, auditors, risk managers, and the company's directors to ensure there are no security gaps, and it still ignores the liabilities side, he said.

"Publishing a simple wallet that you can track is really just a crypto parlor trick. I get why people like it, and it's interesting if you have an exchange," he added. "But let me tell you the real lesson you should learn from FTX and Mt. Gox is, don't do business with shaky offshore exchanges run by juvenile tweakers. If you're a crypto person, hold your own crypto."

On Monday, Strategy announced it had purchased another 4,020 bitcoins for about $427.1 million at an average price of $106,237 per bitcoin. Strategy now holds a total of 580,250 BTC — worth over $63.5 billion — bought at an average price of $69,979 per bitcoin for a total cost of around $40.6 billion. That's the equivalent of more than 2.7% of bitcoin's total 21 million supply and implies around $23 billion of paper gains.