Michael Saylor, CEO of MicroStrategy and a Bitcoin permabull, thinks that traditional financial markets aren’t quite ready for Bitcoin-backed bonds.
As per the source Saylor said on Tuesday that he would love to see Bitcoin-backed bonds marketed in the same way that mortgage-backed securities are, but that “the market is not quite ready for that right now.” A term loan from a major bank was the next best option.”
The comments came just two days after MicroStrategy’s (MSTR) Bitcoin-specific company MacroStrategy launched a $205 million Bitcoin-collateralized loan to purchase even more Bitcoin. This was a one-of-a-kind loan because it was MicroStrategy’s first time borrowing against its own Bitcoin holdings — which are currently valued at around $6 billion — to purchase more of the cryptocurrency.
Saylor’s remarks come on the heels of El Salvador’s recent decision to postpone the March 23rd issuing of its $1 billion Bitcoin-backed “Volcano Bond.” The decision is to postpone the bond, according to El Salvador’s Finance Minister Alejandro Zelaya, was made due to overall financial instability in the worldwide market caused by the situation in Ukraine.
Saylor, in a possible warning to El Salvador, stated that the country’s Volcano Bond was somewhat riskier than his company’s Bitcoin-collateralized loan.
“That’s a hybrid sovereign debt instrument rather than a pure Bitcoin-treasury move.” This has its own credit risk and has nothing to do with the Bitcoin issue at all.”
Saylor went on to state that he is quite enthusiastic on the long-term prospects of Bitcoin-based bonds, even going so far as to suggest that cities such as New York employ Bitcoin as a debt instrument.
“New York can issue $2 billion in debt and buy $2 billion in Bitcoin – the Bitcoin yields 50% or more, while the loan costs 2% or less.”
Saylor’s activities progressively transformed MicroStrategy into a somewhat leveraged Bitcoin holdings business, with MSTR shares strongly tied with Bitcoin’s price.
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