In a statement at the Bitcoin 2025 conference in Las Vegas on May 26, Michael Saylor, the co-founder and Executive Chairman of business intelligence firm Strategy (formerly MicroStrategy), warned against institutions adopting on-chain proof-of-reserves, citing significant security risks.
When Blockware Solutions’ head analyst, Mitchell Askew, asked Saylor if Strategy would adopt the on-chain proof-of-reserves method, the American entrepreneur did not give a direct answer but called it a bad idea.
Stating the potential vulnerabilities of a company or institution publicly disclosing its crypto assets’ reserve holdings on the blockchain, Saylor said:
“The current, conventional way to publish proof of reserves is an insecure proof of reserves. 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.”
Transparent But Not Safe
Following the collapse of the now-defunct crypto exchange FTX in November 2022, numerous custodians, ETF issuers, and crypto exchanges, including Kraken, Binance, OKX, and Bitwise, a crypto asset manager, began publicly disclosing their crypto holdings on the blockchain to promote transparency.
However, Saylor mentioned at the conference that while the method can help build trust, it could also compromise the security of an institution’s cryptocurrency holdings, thereby exposing them to security threats, including potential hacks and exploits.
It’s hardly surprising that Strategy approaches on-chain proof of reserves with a great deal of skepticism and caution, given its position as the world’s largest corporate holder of Bitcoin, with its substantial holdings of the leading cryptocurrency.
On Monday, Strategy added 4,020 bitcoins to its crypto portfolio, worth about $427.1 million at an average price of $$106,237 per coin. The firm’s latest purchase brought its total holdings to 580,250 $BTC, valued at about $40.61 billion at an average price of $69,979 per bitcoin.
Crypto Hacks on the Rise
Given the surge in crypto hacks, it’s logical that Saylor worries about companies publicly revealing their holdings, which could make wallets vulnerable to tracing and attacks. A report from last year revealed that the crypto community experienced over 20 hacking incidents, resulting in losses exceeding $120 million.
Earlier this year, the popular exchange Bybit recorded one of the largest crypto hacks in history after losing approximately $1.4 billion in a security breach. Although the platform has recovered some of the stolen funds, it has yet to bounce back from the damage.
