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In a recent interview, Bitcoin cheerleader Michael Saylor shocked many by dismissing concerns about Bitcoin custody, but David isn’t surprised by his statements.
Saylor’s Recent Controversial Statements Are Consistent With His Past Statements
Michael Saylor is known for being an ardent Bitcoin maximalist. He advocates heavily for Bitcoin, while usually bashing over cryptocurrencies, arguing that Bitcoin is the best and only crypto asset – there is no second best. His devotion to Bitcoin has spawned a thousand memes, and has arguably made him the most popular flag bearer for Bitcoin. This makes his answers in a recent interview baffling to many.
In the interview with journalist Madison Reidy, the conversation shifted to the risks of Bitcoin custody, specifically third-party custodians and the potential vulnerability to asset seizure and confiscation.
Reidy asked, “If more bitcoins are held with third-party custodians, what risks does that pose? Could the concentration of supply with fewer large institutions increase the risk of seizure and confiscation, like we’ve seen with gold? Isn’t this exactly what Bitcoiners don’t want?”
Saylor, whose company Microstrategy in effect custodies a significant amount of bitcoin, replied, “No, I think it’s the opposite. I think that when bitcoin is held by a bunch of crypto anarchists who aren’t regulated, who don’t acknowledge government, taxes, or reporting requirements, that increases the risk of seizure. Sure, you have an OG crypto community that’s hardcore about self-custody. But 99.9% of the money is actually in the traditional economy.”
Reidy pressed further, “Consider the Great Depression. People thought their gold was safe in banks until the executive order of 1933. Isn’t it possible that something similar could happen again? People’s bitcoin wouldn’t be entirely safe.”
Saylor responded, “People say that, but it’s mostly paranoid crypto anarchists. It’s a myth and a trope that repeats itself. First of all, the government didn’t really seize gold back then—people voluntarily turned it in. They didn’t kick in doors, arrest people, shoot them, and take their gold. That never happened.”
First of all, Saylor is plain wrong. Most of the gold seizures occurred at financial institutions that held gold on behalf of clients. Those who kept gold in self-custody were largely safe from seizure. It’s a pretty safe assumption that if the government demands Blackrock, Coinbase, and Microstrategy’s bitcoin reserves, they’ll readily hand them over. And if most of the supply is held by a few, it seems likely the government will be more tempted to do it because it’s easier to do.
Second, Saylor’s comments are an affront to what Bitcoin stands for. One of the fundamental values of Bitcoin stems from self-custody. Bitcoin is a digital bearer asset, meaning that ownership is determined by possession of a cryptographic key rather than through the permission of a third-party like a bank. We finally get digital money, and all its attendant benefits (convenience, speed, security), with the optionality of gold or cash money.
This optionality to withdraw bitcoin (and other cryptocurrencies) into self-custody is what is starting to push back against the centralization and corruption of our current system. Saylor’s dismissal of this displays a shocking lack of understanding of bitcoin’s value, a sentiment echoed by Vitalik Buterin.
Buterin said in a post on X, “I’ll happily say that I think Saylor’s comments are batshit insane. He seems to be explicitly arguing for a regulatory capture approach to protecting crypto (“when you have regulated public entities like Blackrock and Fidelity and … holding the asset, all the lawmakers and law enforcement arms are invested in those entitites”). There’s plenty of precedent for how this strategy can fail, and for me it’s not what crypto is about.”
But where Vitalik and others see insanity, I see banal selfishness. Saylor has and continues to make public statements that support his particular circumstances: heavy BTC bags held by Microstrategy. It makes sense that he’d disparage self-custody supporters as “paranoid crypto anarchists,” and advocate for the buttoned-up business class to steward the majority of bitcoin.
Consider May 1, 2024, when Saylor stated at Microstrategy’s Bitcoin For Corporations conference, “None of [these tokens] will ever be wrapped by a spot ETF, none of them will be accepted by Wall Street, none of them will be accepted by mainstream institutional investors as crypto assets.” He contrasted this with Bitcoin, which he described as the only crypto asset with full institutional acceptance, referring to it as the “one universal” institutional-grade crypto asset without any contenders. Twenty-two days later the Ethereum ETF approval was announced.
Seems insane to make such presumptive statements, but you constantly see X (Twitter) accounts shilling their bags with exaggerated aspirational hopium.
Then, of course, there’s the infamous “there is no second best” rant, where you could almost see in real time Bitcoin’s negative price action weighing on Microstrategy’s balance sheet and squeezing Saylor’s sanity from his ears. That one spawned countless memes.
Saylor’s self-interests have long aligned with Bitcoiners, but now they’re starting to diverge.