Saylor vs. Buterin: Debate Erupts Over Bitcoin Self-Custody

• Michael Saylor advocates for financial companies’ crypto custody instead of self-custody.
• Vitalik Buterin criticizes Saylor’s idea as insane and adds that it’s against the principle of decentralization.
• Casa co-founder Jameson Lopp states that institutional control of crypto could stifle innovation.

MicroStrategy CEO Michael Saylor sparked a strong reaction with his comments on Bitcoin self-custody and the risk of government seizures. Industry leaders like Vitalik Buterin openly disagreed with Saylor, whose views challenge the core principle of decentralization in crypto. Buterin called Saylor’s idea of institutional crypto custody “insane.”

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In an interview on the “Markets with Madison” podcast, Saylor referred to the crypto community as “paranoid crypto-anarchists,” claiming they are overly fearful of government seizure. He dismissed such fears as an exaggerated “trope” and suggested using large financial custodians like BlackRock. He stated that holding cryptocurrencies with these companies could be more secure than self-custody.

Saylor went on to say that the crypto community’s resistance to regulation, government authority, tax rules, and other legal requirements often results in asset seizures. He argued that complying with regulations and relying on financial companies for crypto custody would reduce these risks.

Essentially, Saylor is promoting a more regulated approach to cryptocurrency custody, which he believes offers greater security and legitimacy. However, his stance has not been well-received by the crypto community, as it raises questions about the importance of decentralization and individual control over crypto.

Buterin and Lopp Counter Saylor’s Centralization Argument

Ethereum founder Vitalik Buterin forcefully rejected Saylor’s suggestion that relying on regulatory capture is the best way to protect crypto. He pointed to historical examples to illustrate how relying on financial institutions to store crypto could lead to failure.

Casa co-founder Jameson Lopp also spoke out against Saylor’s claims. In an X post on October 22, he warned about the “long-term negative ramifications” of third-party crypto custody. He explained that it could increase the overall risk of asset seizure and loss. This centralization takes away individual Bitcoiners’ ability to participate in governance activities like running nodes or taking part in trading forks.

He also noted that institutional control of crypto could slow down innovation because these firms tend to overlook advanced cryptographic features. Lopp emphasized that self-custody is vital not just for individual Bitcoin holders, but for the “continued strengthening and improvement of the entire network.”