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Michael Saylor: Bitcoin bonds aren't quite ready for the financial markets

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The traditional financial markets are not ready for bitcoin-backed bonds, MicroStrategy CEO Michael Saylor said.


MicroStrategy CEO and Bitcoin (BTC) enthusiast Michael Saylor believes traditional finance is not yet ready for Bitcoin-backed bonds. 

On Tuesday, Saylor told Bloomberg that he would love to see bitcoin-backed bonds sold like mortgage-backed securities but warned that "the market is not quite ready for that just yet.". The next best idea was a term loan from a major bank.”

Two days earlier, MicroStrategy's BTC-focused subsidiary MacroStrategy announced it had taken out a $205 million BTC-secured loan to purchase even more Bitcoins. This loan was unique, because MicroStrategy borrowed from its own Bitcoin reserves — which are valued at approximately $6 billion — for the first time to purchase additional Bitcoins.

The comments by Saylor follow El Salvador's decision to delay the issuance of its $1 billion Bitcoin-backed "Volcano Bond" on March 23. According to El Salvador’s Finance Minister Alejandro Zelaya, the decision to delay the bond was due to general financial uncertainty in the global market driven by conflict in Ukraine

Saylor warned El Salvador's Volcano Bond might be riskier than his company's Bitcoin-collateralized loan,

“That’s a hybrid sovereign debt instrument as opposed to a pure Bitcoin-treasury play. That has its own credit risk and has nothing to do with the Bitcoin risk itself entirely.”

Saylor continued that he remains extremely bullish about Bitcoin-based bonds, saying it would be best for cities like New York to use Bitcoin as a debt instrument in the future.

“New York can issue $2 billion of debt and buy $2 billion worth of Bitcoin — the Bitcoin is yielding 50% or more, the debt costs 2% or less.”

Also read - Bitcoin Bonds In El Salvador May Be Delayed

El Salvador Finance Minister Alejandro Zelaya - who had previously said the bond sale would take place between March 15 and March 20 - noted the conflict in Ukraine and Russia could delay the process “We have the tools almost finished, but the international context will tell us,” he told a local TV station.

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