Michael Saylor warns against on-chain proof of reserves

Michael Saylor, executive chair of Strategy, expressed concerns about institutions publishing onchain proof-of-reserves for their crypto holdings.

Speaking at the Bitcoin 2025 conference in Las Vegas on May 26, Saylor described the practice as a “bad idea” that could increase security vulnerabilities.

“The current, conventional way to publish proof of reserves is an insecure proof of reserves,” e explained.

“It actually dilutes the security of the issuer, the custodians, the exchanges and the investors,” Saylor added.

When asked whether Strategy would publish its own proof-of-reserves, Saylor did not provide a direct answer.

Proof-of-reserves is a transparency measure used by many crypto exchanges and funds to verify they hold sufficient assets to cover customer deposits.

This practice gained traction after the collapse of FTX (CRYPTO:FTT) in November 2022, which raised concerns about exchange solvency.

Exchanges such as Binance, Kraken, and OKX, along with asset manager Bitwise, have adopted proof-of-reserves to reassure customers.

However, Saylor emphasised that proof-of-reserves only show what companies hold, not what they owe, which limits their effectiveness.

He warned that publishing wallet addresses publicly could expose companies to tracing and hacking risks.

Saylor suggested using artificial intelligence to analyse the security implications, stating it would generate “50 pages of security problems.”

He also referenced lessons learned from previous crypto exchange failures like FTX and Mt. Gox but maintained that proof-of-reserves is not the right solution for institutional security.

According to BitcoinTreasuries.NET, Strategy holds 576,230 Bitcoin (CRYPTO:BTC) valued at approximately $62.6 million, making it one of the largest corporate Bitcoin holders.

More than 110 publicly traded companies worldwide currently hold Bitcoin as part of their assets.