Étienne Girard
With the SEC’s approval for options trading on BlackRock’s Bitcoin ETF, discussions about Bitcoin yields have resurfaced. During a recent podcast, MicroStrategy Chairman Michael Saylor shared his perspective on Bitcoin’s place in traditional banking.
Michael Saylor Suggests Bitcoin-Backed Loans
In a debate about leverage, banking, and Bitcoin, Michael Saylor and Bitcoin advocate Saifedean Ammous explored how Bitcoin could integrate with the banking sector. Saylor proposed that large U.S. banks, which are government-backed, could provide USD loans secured by Bitcoin holdings. This system would allow Bitcoin holders to generate returns and benefit from price appreciation without selling their BTC. He also pointed out that using Bitcoin as collateral for loans would transfer the credit risk to major banks like JPMorgan, Citi, or Bank of America.
MicroStrategy, currently the largest corporate holder of Bitcoin, recently raised $1.01 billion through a convertible debt offering to purchase more BTC. With its massive holdings of 252,220 BTC, the company stands to benefit significantly from Bitcoin-based yields.
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Skepticism Surrounding Bitcoin Yields
However, Saifedean Ammous, author of The Bitcoin Standard, expressed doubts about the viability of Bitcoin-backed yield models. He cautioned that such schemes could lead to the same kind of failures seen with Celsius and BlockFi, arguing that without a lender of last resort, these systems are unsustainable. Ammous also warned that relying on USD as the foundation for such models assumes its continued dominance, a risky bet given rising movements toward de-dollarization and emerging BRICS payment systems.
Caitlin Long’s Cautionary Advice
To address the risks associated with Bitcoin lending, Custodia Bank CEO Caitlin Long offered a more conservative approach. She suggested that lending BTC with up to 1:1 leverage is reasonable, but anything beyond that would render the lender insolvent by default.
Despite these concerns, MicroStrategy’s stock has significantly benefited from its Bitcoin investments, outperforming major tech companies and the S&P 500 over the past four years.
