Michael Saylor Criticizes Proof-of-Reserves for Security Risks, Advocates Third-Party Audits to Build Trust in Bitcoin Exchanges
Michael Saylor, executive chairman of Strategy (formerly MicroStrategy), reignited the debate around proof-of-reserves (PoR) at the Bitcoin 2025 Conference in Las Vegas. Saylor asserted that while PoR is intended to increase transparency for Bitcoin exchanges and crypto platforms by disclosing on-chain wallet addresses, it exposes both institutions and investors to increased security threats such as hacking and social engineering. Additionally, Saylor highlighted that PoR verifies only assets, not liabilities, offering an incomplete and potentially misleading picture of an exchange’s financial health. In response, he advocated for institutional-grade third-party audits by reputable firms for greater trust and legal accountability. Saylor acknowledged future cryptographic upgrades, like zero-knowledge proofs, could enhance PoR security. Meanwhile, major exchanges including Binance, Kraken, OKX, and Bitwise continue to use PoR to regain user confidence after scandals like FTX and Mt. Gox. The crypto community remains divided, with some questioning the transparency of companies such as Strategy, while others defend PoR as effective. This ongoing discussion influences crypto trust, regulatory scrutiny, and could impact investor confidence and risk assessments, especially as regulatory oversight is expected to strengthen.
Neutral
While Michael Saylor’s criticism of proof-of-reserves (PoR) and his advocacy for third-party audits emphasizes valid security and transparency concerns, the ongoing industry debate has not triggered significant immediate market reaction for Bitcoin or major exchanges. Historically, discussions on transparency and audit practices influence long-term trust and regulatory compliance, but they rarely cause sharp price volatility in the short term. The news may impact how traders assess risk at exchanges and influence regulatory trends, but without concrete regulatory changes or a new security breach, the fundamental market dynamics for Bitcoin remain neutral in the near term. Over the long term, enhanced auditing or advanced PoR solutions could boost investor confidence and market stability; however, at this stage, the impact is primarily on sentiment and practices rather than on Bitcoin’s price.