Proof of Custody Day: Why Bitcoin Needs an Annual Withdrawal Test

Bitcoin was created to eliminate the need to trust banks, custodians, and intermediaries.

Yet today, portions of “bitcoin exposure” exists only as database entries, contracts, and promises because owners are accepting convenience over custody and have not requiring real delivery.

If that sounds familiar, it should. Bitcoin was designed to verify on-chain through an explorer what exists, who holds it, and whether claims are actually backed.

Ownership vs. promises

Owning Bitcoin means controlling ones private keys in a self-custody wallet. For those who don’t know how to do this, visiting bitcoin.org’s choose your wallet site can help any user learn how to do this. Not having your Bitcoin in your own self-custody wallet is only a claim on Bitcoin and not the Bitcoin itself. Take FTX as an example how this works out for people when those claims are made for pennies on the dollar.

Futures, options, swaps, broker apps, and custodial accounts all share one feature; they do not require delivery unless the customer demands it.

As long as no one asks for their money in banks or tokens to be transferred to their wallet, the system is vulnerable, not battle tested and will lead to habitual fraudulent behavior by “unknown” financial players like a Sam Bankman-Fried or the next Bernie Madoff behavior.

Why Proof of Custody Day Matters

Traditional finance collapses not when prices fall, but when settlement is demanded, which is why I am advocating for Proof of Custody Day!

Why? Because Bitcoin fixes fraudulent behavior when users actually use it.

Proof of Custody Day is a voluntary, peaceful, annual event where bitcoin holders withdraw their coins from custodial platforms and take self-custody. Proof of Custody Day will expose fraudulent actors.

Repeating Proof of Custody Day every April 5 is intended to flush out fraudulent practices built on paper Bitcoin. Why April 5? Because April 5marks the anniversary of the 1933 gold confiscation order (Executive Order 6102) and a reminder of why verifiable self-custody and on-demand settlement matter in any monetary system.

While the first occurrence may be uncomfortable for some institutions, Proof of Custody Day creates a self-correcting mechanism that strengthens the ecosystem and protects new participants from being misled by unbacked claims. This is how Bitcoin holders can help keep the system honest, establish a shared narrative that earns sustained media attention, and support the onboarding of global users directly on-chain.

Proof of Custody Day: Why Bitcoin Needs an Annual Withdrawal Test was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.