Vitalik Buterin, co-founder of Ethereum, sharply criticized Michael Saylor’s comments on Bitcoin custody. 

Saylor, the executive chairman of MicroStrategy, recently advocated for custody of Bitcoin through large banks instead of self-custody methods. This view, which many see as contrary to the foundational principles of Bitcoin, has sparked debate among crypto enthusiasts and advocates.

Saylor’s Controversial Custody Stance

In a recent episode of the "Markets with Madison" podcast, Saylor dismissed fears of government seizure of Bitcoin as unfounded. He referred to these concerns as a “trope” perpetuated by “paranoid crypto-anarchists.” 

According to Saylor, individuals who resist regulation and reject governmental authority increase their risk of seizure. He stated:

“I think that when the Bitcoin is held by a bunch of crypto-anarchists who aren’t regulated entities... that increases the risk of seizure.”

Saylor believes that custodianship through established financial institutions reduces this risk, as these entities comply with legal and tax obligations. He argued that Bitcoin holders would be better off trusting large banks instead of relying on self-custody methods, such as hardware wallets.

He noted:

“You have an OG crypto community that’s very hardcore about it, but if you look at where all the money is — 99.9% of the money — is actually in the traditional economy.”

Such remarks have surprised many in the cryptocurrency space, as they run counter to the cypherpunk ethos that prioritizes individual control over assets.

Buterin’s Strong Response

Vitalik Buterin did not hold back in his criticism of Saylor's perspective. Acknowledging his past promotion of certain Bitcoin narratives, he stated:

“I think Saylor’s comments are batshit insane.”

Buterin argued that Saylor appears to advocate for a "regulatory capture" approach to cryptocurrency protection. 

Buterin further explained:

“There’s plenty of precedent for how this strategy can fail, and for me, it's not what crypto is about.”

Buterin acknowledged his previous promotion of Bitcoin narratives but stated that advancements in cryptographic tools, like zk-SNARKs and account abstraction, have altered the landscape of self-custody.

He reiterated that the true value of cryptocurrencies lies in their decentralization and the ability to function outside traditional financial systems. 

Community Reactions and Concerns

Jameson Lopp, co-founder of Casa and a strong advocate for Bitcoin self-custody, emphasized the importance of decentralization. He warned against concentrating Bitcoin ownership among a few large organizations, which could introduce systemic risks, such as asset seizures or loss.

Lopp stated that self-custody allows Bitcoin users to participate in network governance, running their own nodes and influencing software updates and forks. This participation is crucial for maintaining the integrity of the Bitcoin ecosystem.

Critics of Saylor, including Simon Dixon and John Carvalho, also voiced their concerns. Dixon suggested that Saylor's new position may stem from MicroStrategy's evolving business strategy, potentially seeking to position the company as a Bitcoin bank. 

Carvalho warned that Saylor's stance risks reducing Bitcoin to an investment vehicle rather than a means of exchange, undermining its potential as a decentralized financial system.