Michael Saylor Discusses Why On-Chain Proof-of-Reserves Is a Poor Approach

Michael Saylor, the executive chair of Strategy, has expressed concerns that on-chain proof-of-reserves could lead to security issues related to artificial intelligence.

During a discussion at the Bitcoin 2025 conference, Saylor described this practice as a “bad idea.”

Concerns Over Security and Limited Transparency

In response to inquiries about the increasing number of institutions implementing this transparency strategy, Saylor voiced his disapproval.

“It undermines the security for issuers, custodians, exchanges, and investors. It’s not advisable, it’s a terrible idea,” he stated.

The 60-year-old recognized the lessons the sector needs to take from the downfalls of FTX and Mt. Gox but asserted that proof-of-reserves isn’t the right solution for organizations.

He emphasized that experienced security professionals would not recommend disclosing all wallet addresses, which is a component of this method. Furthermore, he suggested that if an AI were tasked with assessing the long-term implications of sharing wallet details, it could produce extensive documentation highlighting numerous potential threats.

Saylor pointed out that while transparency holds value, proof-of-reserves merely indicates a company’s assets without offering insight into its liabilities, rendering it an incomplete gauge of financial health. He recommended that instead of this method, organizations should pursue more comprehensive accountability measures that better reflect their financial soundness.

Will Strategy Use Proof-of-Reserves?

When Blockware Solutions’ chief analyst Mitchell Askew inquired if Strategy would contemplate adopting this verification approach, Saylor sidestepped a clear answer.

The concept of proof-of-reserves became prominent after the fallout from exchanges like FTX and Mt. Gox, which left investors questioning whether these platforms had sufficient assets to meet their obligations.

The purpose of these disclosures is to demonstrate that institutions possess adequate digital assets to support customer deposits. They are also utilized by entities like crypto-tracking exchange-traded funds to validate asset backing. Numerous exchanges, including Binance, Kraken, and Bitwise, have embraced this practice to show they are solvent.

This dialogue comes on the heels of Strategy’s announcement regarding its acquisition of an additional 4,020 BTC for close to $430 million. The firm now holds 580,250 BTC and has reported a year-to-date BTC yield of 16.8% in 2025, establishing itself as the largest corporate holder of the leading cryptocurrency.

However, data from Google Finance indicates that the stock of the business intelligence company closed at $369.51 on May 26, marking a 7.50% decline over the prior 24 hours.