MicroStrategy Chairman Michael Saylor has dismissed the current practice of publishing on-chain proof of reserves, calling it fundamentally insecure and unsuitable for institutional adoption.

Speaking recently on the topic, Saylor emphasized that the industry’s current approach to transparency may actually undermine security rather than enhance it.

“A lot of people learned lessons from FTX, but not necessarily the lessons the institutional community needs to learn,” he said. “The current method of publishing proof of reserves is insecure. It dilutes the security of the issuer, the custodians, the exchanges, and the investors. It’s a bad idea.”

Proof of Reserves ≠ Proof of Liabilities

Saylor highlighted a major flaw in how proof of reserves is typically presented: it often only shows assets, without revealing liabilities. This, he argued, presents an incomplete — and potentially misleading—picture of a company’s financial health.

“Most of what’s being presented as proof of reserves is actually just proof of assets,” he said. “It doesn’t reflect the liabilities, and that matters a lot. If you’re not proving both sides of the balance sheet, you’re not proving anything of real value.”

Public Wallets Invite Security Vulnerabilities

Beyond the accounting concerns, Saylor issued a strong warning against the public disclosure of wallet addresses. He likened it to publishing a family’s financial and contact information online.

“It’s like publishing the addresses and bank accounts of all your kids — and their phone numbers — and thinking that somehow makes your family safer. It doesn’t. It puts them at risk.”

He stressed that public wallet addresses create a permanent, traceable history of transactions that can be exploited.

“Ask an AI to list the security risks of publishing wallet addresses. You’ll get a 50-page book. This is not something any institutional-grade security team would endorse.”

A Call to Rethink Crypto Transparency and Security

Saylor made it clear that MicroStrategy has no intention of publishing its wallet addresses or on-chain reserves under the current standards, describing the practice as incompatible with the requirements of institutional-grade security.

“If we really care about crypto security, we need to rethink the framework entirely,” he said. “Publishing wallet addresses is not the solution.”

As the industry continues to debate transparency and trust in the wake of collapses like FTX, Saylor’s remarks are a stark reminder that not all paths to openness are created equal—and some may come at the cost of long-term security.