The recent approval of options trading for BlackRock’s Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC) has reignited discussions on Bitcoin yields and their potential role in the financial system. During a podcast debate, MicroStrategy Chairman Michael Saylor offered a new perspective on integrating Bitcoin into the traditional banking sector, suggesting that Bitcoin could be leveraged to generate yields without selling it.
Michael Saylor Suggests Bitcoin-Backed Loans
Saylor proposed that major U.S. banks, backed by the government, could offer loans in USD using Bitcoin as collateral. According to Saylor, this would allow Bitcoin holders to live off their BTC holdings without the need to sell, while also benefiting from Bitcoin’s long-term price appreciation.
He highlighted that large banks like JPMorgan, Citi, and Bank of America could present a safer avenue for Bitcoin-backed loans, given their credit strength and the government’s implicit backing.
Saylor’s views come as MicroStrategy, which holds the largest corporate Bitcoin stash of 252,220 BTC, has continued to invest heavily in the cryptocurrency. Just last week, the company conducted a $1.01 billion convertible notes offering, which it intends to use to acquire more Bitcoin. As a result, Saylor believes Bitcoin-backed loans present a compelling opportunity for investors to extract yields while retaining their Bitcoin exposure.
Difference in Views
However, not everyone in the discussion shared Saylor’s optimism. Saifedean Ammous, author of The Bitcoin Standard, voiced concerns about the sustainability of such models. He warned that relying on Bitcoin yields through traditional banking structures could lead to systemic failures, similar to what transpired with Celsius and BlockFi, two companies that collapsed due to risky lending practices.
Ammous argued that without a “lender of last resort,” the risks associated with leveraging Bitcoin are substantial.
Ammous also expressed skepticism about the long-term strength of the U.S. dollar, on which Saylor’s model depends. With increasing discussions around de-dollarization and alternative payment systems being developed by BRICS nations, he questioned how long the dollar would continue to dominate global finance.
Caitlin Long, CEO of Custodia Bank, offered a more measured perspective, suggesting that Bitcoin-backed loans with a leverage ratio of up to 1:1 are safe. However, exceeding that level could leave lenders insolvent, given Bitcoin’s volatility.
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