The increasing trend of companies holding Bitcoin (BTC) in their treasuries has raised concerns about the concentration of BTC in a few custody service providers. Casa co-founder and CSO Jameson Lopp pointed out that relying solely on trusted third parties for custody could pose a systemic risk. He emphasized the importance of also promoting the narrative of self-custody to maintain sovereignty over BTC holdings.
Lopp’s concerns were further highlighted when Pierre Rochard announced the Bitcoin Bond Company’s plans to invest up to $1 trillion in Bitcoin by 2046. While Rochard mentioned the availability of various institutional custodians to work with, Lopp questioned the potential risks associated with centralized custody arrangements.
Currently, public and private companies hold over 1 million BTC in their treasuries, accounting for a significant portion of the total BTC in circulation. The reliance on custodians to manage institutional Bitcoin positions mirrors traditional finance practices, where licensed custodians help meet governance and compliance requirements.
Michael Saylor, the president of Strategy executive, emphasized the benefits of using institutional custodians to reduce the risk of government seizure of Bitcoins. Saylor’s company holds a substantial amount of BTC divided among custodians like Fidelity, Anchorage Digital, and Coinbase Prime, similar to other high-profile entities like BlackRock.
While custodial services streamline treasury management, they also introduce single points of failure in a decentralized network like Bitcoin. The debate between centralized custodians and self-custody continues, with Kaia’s chairman Sangmin Seo highlighting the need for a balance between sovereignty and usability to avoid friction in the ecosystem.
In conclusion, the growing adoption of Bitcoin by companies as a treasury asset underscores the need for a thoughtful approach to custody solutions. Balancing the benefits of institutional custodians with the principles of self-custody is crucial to mitigating systemic risks and maintaining control over BTC holdings. Building infrastructure that addresses both aspects is key to evolving the custody landscape without compromising on security and decentralization.