Published: 31.03.2022
Article reading time:
2 minutes.
The CEO of MicroStrategy believes that financial markets are not yet ripe for the introduction of Bitcoin-backed bonds.
Bitcoin investment advocate Michael Saylor told Bloomberg that he would like to see the day when people start selling bonds in bitcoin in a similar way to mortgage-backed securities. Saylor mentioned plans by the Salvadoran government to launch about $1 billion in “volcanic bonds” that would be backed by bitcoin. However, the head of MicroStrategy called them a hybrid instrument of domestic debt, not bitcoin-backed government securities. This tool has its own credit risks and has nothing to do with the risks inherent in bitcoin, Saylor insists.
The head of MicroStrategy says that this is the reason why the market is not yet ready to launch bonds in bitcoin. A much more suitable option is to get a loan secured by bitcoins. Saylor’s remarks come after a subsidiary of MicroStrategy received a $205 million emergency loan from Silvergate Bank, with bitcoin as collateral. After examining various funding options, including the use of DeFi, MicroStrategy considered this the most optimal solution.
“If it was JPMorgan providing the 4% interest rate, I could make a deal. But if the hedge fund has less than 100 times my balance, there is a risk that the counterparty will not offset the nominal return,” says Saylor.
He is sure that any corporation and even, for example, municipalities can use bitcoin in this way. For example, the authorities of New York can issue $2 billion worth of debt and buy $2 billion worth of Bitcoin bonds, then the return on Bitcoin will be more than 50%, and the cost of debt will be less than 2%.
Earlier, Sailor called bitcoin one of the most scarce products in the world, while other products can be created in any quantity. He is sure that in the future bitcoin will become one of the forms of ownership.
Source: Bits
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