Bitcoin Was the Asset. Now Institutions Are Building Around It

Conference participants discussed bitcoin-backed bonds, preferred shares (stock with priority over common shares for dividends), convertible securities (instruments that can be exchanged for shares under specified terms), and financing for companies that hold bitcoin in their treasuries. What stood out to TD Cowen was not that these structures exist, but that participants now appear to assume their continued development.

Some financing structures are already active. Strategy Inc. (Nasdaq: MSTR) disclosed on Sept. 28 that it had bought another 1,665 BTC and repurchased $152 million of its STRC preferred stock. Its preferred shares give investors exposure to a company whose balance sheet is dominated by bitcoin, with terms and risks that differ from owning the cryptocurrency directly.

That distinction becomes more consequential as companies issue several types of securities against the same treasury. Strategy’s internal measure of bitcoin asset coverage assigns different thresholds to its preferred shares. The measure illustrates the company’s capital structure, but it is neither an external credit rating nor a measure of cash available to pay dividends.

The Question Shifts to How Institutions Hold Bitcoin