Buterin labels Saylor’s Bitcoin custody comment as ‘insane’ – Why?

• Saylor has faced community backlash after his latest BTC custody comments. 
• Buterin criticized him for pushing for ‘a regulatory capture approach’ in crypto.

Vitalik Buterin, Ethereum [ETH] co-founder, is the latest to criticize Michael Saylor’s perceived undermining comments on Bitcoin [BTC] self-custody. 

During a recent interview, Saylor was asked whether having BTC custody left to large banks and third-party entities was a centralization risk and potential for government seizure.

He replied,

“When Bitcoin is held by a bunch of paranoid crypto-anarchists, who aren’t regulated entities, don’t acknowledge government, tax, or reporting requirements, that increases the risk of seizure.” 

Buterin slams Saylor

His comments attracted wide criticism from the community, with Buterin being the latest to voice his disagreement. Buterin rebutted, 

“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.” 

He added that regulatory capture championed by Saylor doesn’t align with what crypto stands for. 

Jameson Lopp, co-founder of BTC self-custody platform Casa HODL, echoed a similar sentiment. 

He reinforced that self-custody isn’t only for ‘paranoid crypto investors,’ but championing for third-party custody would be net negative in the long run.  

“Self-custody is not merely important to individual Bitcoin holders. It’s important for the continued strengthening and improvement of the entire network.”

For perspective, self-custody allows users complete control of the keys to their wallets. On the contrary, third-party custody dilutes user control of their digital assets.

The risky nature of the latter is best captured by a popular quote: ‘Not your keys, not your coins.’ 

On his part, Samson Mow of JAN3com, an advisor for nation-state BTC adoption, reinforced the risk involved in third-party custody, whether one is paranoid or not. 

“Just because you’re a paranoid crypto-anarchist, don’t mean they’re not after you.”

Large firms prefer third-party custodians

Well, the extensive criticism wasn’t a surprise, given Saylor’s image as a top BTC publicist and maximalist. 

However, this has been his stance on BTC custody, especially for large firms jumping into the crypto markets. 

In a 2022 interview with Blockware, he advocated for third-party custody for large firms, citing their robust checks and balances.

He termed it a ‘blessing and curse’ for the asset, 

“That’s the blessing (self custody). The curse is when you want New York City, Chicago, San Fransisco, US, and 10,000 publicly traded institutions to buy and embrace Bitcoin. Then you have to deal with control structures of those companies.”

That said, each side of the debate had solid arguments. But it remains to be seen how the potential risks of BTC network centralization will be mitigated as more large firms join the party.