Financial markets around the world are not yet ready for bitcoin-backed bonds (BTC), according to the CEO of the enterprise software company MicroStrategy, Michael Saylor. However, the situation could be different for the “volcano bonds” planned by El Salvador.
“I would love to see people selling bitcoin-backed bonds like mortgage-backed securities one day,” Saylor said in an interview with Bloomberg, adding that he finds the market is not “not quite ready for that yet”.
Saylor’s comments came shortly after his company secured a loan from the bank silver gatecryptocurrency-friendly, backed by bitcoins in MicroStrategy’s reserves, with the goal of buying even more bitcoins.
In Tuesday’s interview, Saylor called lending “the second-best choice” after bitcoin-backed bonds.
With the principal from the loan, we have “effectively turned Bitcoin into productive collateral, allowing us to continue executing our business strategy,” said Michael Saylor when announcing the new loan.
Saylor, who is known to be one of Bitcoin’s strongest advocates, explained during the interview that while the market is not ready for a bitcoin-backed corporate bond, bonds such as those planned by El Salvador could be viable.
“There is a lot of talk about El Salvador’s BTC bonds. It is a hybrid sovereign debt instrument, as opposed to a pure Bitcoin-Treasury bond. It carries its own credit risk and has nothing to do with the risk tied to bitcoin itself,” Saylor said.
El Salvador last week said its bond issuance would likely be delayed until the end of the year, the finance minister Alexander Zelaya having suggested that market conditions were not favorable at the moment.
Meanwhile, MicroStrategy, which has one of the largest bitcoin wallets in the world, first explored other funding options before opting for a bitcoin-backed loan from Silvergate.
Other options include the possibilities offered by the world of decentralized finance (DeFi) and the lending of some of its coins, says Saylor.
“[…] leverage is abundantly available to all companies in the world today,” Saylor said, while suggesting that even municipalities could take advantage of this opportunity.
“New York can issue $2 billion in debt and buy $2 billion worth of bitcoins – Bitcoin earns 50% or more, debt costs 2% or less,” he said.
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