When Michael Saylor announced MicroStrategy's conversion of $250 million in Treasury bonds to bitcoin in August 2020, Wall Street analysts viewed it as a bold gamble. "Better than cash," Saylor declared of bitcoin at the time, drawing skepticism from traditional banking circles.
Today, however, the same banks that once scoffed at corporate bitcoin adoption are now scrambling to get into bitcoin-backed lending as they race to capitalize on its superior characteristics such as institutional-grade collateral and strong product-market fit.
Traditional collateral assets, such as real estate, require manual appraisals, subjective valuations, and various complex legal frameworks depending on the jurisdiction. In contrast, bitcoin offers instant verification of collateral through public blockchain data, real-time 24/7 settlement and liquidation capabilities, uniform quality regardless of geography or counterparty, and the ability to enforce lending terms programmatically.
When the lender realizes they can instantly verify and potentially liquidate bitcoin collateral at 3 a.m. on a Sunday — while real estate remains waiting for manual appraisal, subjective valuation, and the possibility of eviction — there will be no turning back.
1. Traditional banks succumb to bitcoin
MicroStrategy's (MSTR) approach has fundamentally changed how public companies view bitcoin as a treasury asset. Instead of merely holding bitcoin, the company pioneered a treasury model leveraging the public market to amplify its cryptocurrency position — issuing convertible bonds and selling shares in the market to fund the purchase of bitcoin. This strategy has allowed MicroStrategy to significantly outperform spot bitcoin ETFs by harnessing the same financial technique that has made traditional banks robust, but with bitcoin as the underlying asset instead of traditional financial instruments and real estate.
Therefore, one of my predictions for 2025 is that MSTR will announce a 10-for-1 stock split to expand its market share as this will allow more investors to buy shares and options contracts. MicroStrategy's playbook demonstrates how deeply bitcoin has penetrated traditional corporate finance.
I also believe that financial services built around bitcoin will explode in popularity as long-term holders and new investors look to earn more from their positions. We expect to see rapid growth in bitcoin-backed loans and yield-generating products for bitcoin holders worldwide.
Furthermore, there is an almost poetic answer to why bitcoin-backed loans have become so popular — they are a true representation of financial inclusion, with a business owner in Medellín facing mortgage and interest rate requirements similar to a business owner in Madrid. Everyone's bitcoin has the same characteristics, verification standards, and liquidation processes. This standardization removes arbitrary risk premium fees that previously applied to borrowers in emerging markets.
Traditional banks have marketed "global reach" for decades while still maintaining vastly different lending standards across regions. Now, bitcoin-backed lending has exposed this inherent inefficiency: a relic of an obsolete financial system.
2. Borders will collapse as capital flows freely
Countries are entering a new era of competition for bitcoin business and capital. Therefore, we expect to see new tax incentives specifically targeting bitcoin investors and businesses by 2025. These incentives will coincide with expedited visa programs for cryptocurrency entrepreneurs and legal frameworks designed to attract bitcoin companies.
Historically, nations competed for manufacturing facilities or regional headquarters. Now they are competing for bitcoin mining operations, trading locations, and custody infrastructure.
El Salvador's bitcoin treasury position represents an early experiment with the nation's bitcoin reserves. While experimental in nature, their move and the recent proposal for a U.S. Strategic Bitcoin Reserve compel traditional financial centers to confront bitcoin's role in sovereign finance.
Other countries will study and attempt to replicate these frameworks, preparing their own initiatives to attract bitcoin-denominated capital flows.
3. Banks race against obsolescence
In the debt market, demand drives innovation. Public companies are now regularly tapping the bond and convertible bond markets to fund bitcoin-related transactions. This reality has transformed bitcoin from a speculative asset into the foundation of corporate treasury management.
Companies like Marathon Digital Holdings and Semler Scientific have succeeded by following MicroStrategy's lead, and the market has rewarded them. This is the most important signal for treasurers and CEOs. Bitcoin has now captured their attention.
Meanwhile, the bitcoin lending market has come a long way in the past two years. With unnecessary elements cleared away, serious lending institutions now require reasonable collateral separation, transparent custody arrangements, and conservative loan-to-value ratios. Standardizing these risk management operations attracts precisely the type of institutional capital that was previously on the sidelines.
Clearer regulations in the U.S. will open the door for more banks to engage in bitcoin financial products — this will benefit consumers the most, with new capital and competition driving interest rates down and making bitcoin-backed loans more attractive.
4. The Bitcoin and cryptocurrency M&A activity is becoming increasingly robust
As regulatory clarity emerges through SAB 121 addressing cryptocurrency custody and other guidelines, banks will face an important choice: build or acquire to enter the growing bitcoin and lending market. Thus, we predict that at least one of the top 20 U.S. banks will acquire a cryptocurrency business in the next year.
Banks will want to act quickly, and the timeline for developing cryptocurrency infrastructure far exceeds the competitive timeline, while established firms have been handling monthly transaction volumes in the billions through proven systems.
These operational platforms represent years of specialized development that banks cannot quickly replicate. The buyback costs are lower compared to the opportunity cost of delayed market entry.
The convergence of operational maturity, regulatory clarity, and strategic necessity creates natural conditions for the banking industry to access cryptocurrency capabilities. These moves reflect previous financial technology integration patterns, where banks often turned to electronic trading platforms instead of building in-house capabilities.
5. The public market validates bitcoin infrastructure
The cryptocurrency industry is gearing up for a breakthrough year in the public market. We expect to see at least one prominent cryptocurrency initial public offering exceeding $10 billion in valuation in the U.S. Major digital asset companies have built sophisticated institutional service layers with revenue streams now reflecting traditional banks, processing billions of transactions daily, managing significant custody operations with strict compliance frameworks, and generating steady fee income from managed activities.
Therefore, the next chapter of finance will be written not by those resistant to this change but by those who recognize that their existence depends on embracing it.
Note: The views expressed in this article are those of the author and do not necessarily reflect the views of CoinDesk, Inc. or its owners and affiliates.
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