MicroStrategy CEO Michael Saylor says that the enterprise software firm is considering lending out its massive Bitcoin (BTC) holdings to earn income.
In a 2021 fourth-quarter earnings call, Saylor says MicroStrategy currently has over 100,000 Bitcoin that could be deployed to generate yield or for Bitcoin-backed bonds.
“So, 110,000 Bitcoin would be the asset that is not pledged as collateral that we could potentially consider using either to generate yield or to leverage.”
As of January 31st, MicroStrategy held 125,051 Bitcoin.
Saylor says that the counterparty risk is currently high as the number of reputable financial institutions available to transact with is limited.
“I think that as enthusiasm to trade and hold and bank digital assets and Bitcoin in particular grows, there’s going to be an increase in the number of creditworthy counterparties that we could do business with and increasing the options that we have…
I think all of these options that we have, they all come with a risk – a counterparty risk and they come with a theoretical opportunity cost. And then they also come with an execution cost and a whole set of compliance and other sorts of disclosure issues and strategy issues that we consider.”
According to the MicroStrategy CEO, the involvement of blue-chip financial institutions in the space would reduce the counterparty risk.
“In a world where, say, Goldman Sachs and Morgan Stanley and Merrill Lynch, Bank of America, and Citigroup, and JPMorgan are interested and involved in the space, then I think the options that will be available to us over time will be greater. And the counterparty risk that we would have to incur will be less.”
Saylor notes MicroStrategy is the largest publicly traded corporate holder of Bitcoin in the world, and with that comes responsibility.
“We believe we have a responsibility to share what we’ve learned since embarking on this strategy to make it easier for other companies to diversify their balance sheet with this new asset class.”
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