Buterin Slams Bank Custody for Cryptos as "Madness"

Ethereum co-founder Vitalik Buterin has voiced strong opposition to the idea of storing cryptocurrencies in traditional financial institutions, labeling it as "madness." His remarks come in response to MicroStrategy chairman Michael Saylor's recent advocacy for institutional custody of Bitcoin, suggesting that major banks should manage crypto assets.

Buterin argues that this shift undermines the fundamental principles of decentralization that cryptocurrencies like Bitcoin were built upon. 

He criticized Saylor’s approach as a potential pathway to regulatory capture, where powerful financial entities could dominate the cryptocurrency landscape, thereby threatening its decentralized nature. In his view, relying on large institutions such as BlackRock and Fidelity for Bitcoin custody contradicts the very essence of what cryptocurrencies represent.

Saylor's recent change in stance follows the FTX collapse, where he previously championed self-custody as a safeguard for Bitcoin. However, he now contends that institutional management is safer and more practical. 

This pivot has sparked backlash from the crypto community, with critics asserting that it risks transforming Bitcoin into merely an investment vehicle rather than a decentralized financial system. Buterin's comments highlight ongoing tensions within the cryptocurrency community regarding the balance between security and decentralization.