Michael Saylor, CEO of MicroStrategy, said that traditional financial markets are not ready for BTC-based bonds.
The market is not ready for this
MicroStrategy CEO Michael Saylor told Bloomberg that he would like to see bitcoin-backed bonds sold in the same way as mortgage-based securities. However, he warned that “the market is not ready for this yet.”
MicroStrategy’s subsidiary, MacroStrategy, earlier this week announced that it had taken out a loan for $205 million backed by bitcoins. This was the first time a company had taken out a loan under its own bitcoin reserves, which are valued at around $6 billion.
As with Saylor, the government of El Salvador also has a similar attitude and decided to postpone the issue of bitcoin bonds worth $1 billion. According to El Salvador’s Finance Minister Alejandro Zelaya, this was due to general uncertainty in the global financial market and, specifically, the war in Ukraine.
According to Saylor, El Salvador’s bonds, which are based on bitcoin, will be slightly riskier than a loan backed by bitcoins from his company.
He explained that it is a hybrid sovereign debt instrument.
In addition, he said that he was extremely optimistic about the long-term prospects of bitcoin-based bonds, saying so far as to say that it might even make sense for cities like New York to issue debt using Bitcoin.
According to him, the state can issue $2 billion in debt and buy $2 billion in bitcoin. Bitcoin brings in a profit of 50% or more, while debt costs as little as 2%.
Company with lots of cryptocurrencies
To date, MicroStrategy has accumulated 125,051 BTC, which is about $5.5 billion at the current price of $44,550.
Saylor’s actions eventually transformed MicroStrategy into a partially leveraged holding company based on the bitcoin market, with shares closely correlated with the price of the original cryptocurrency.