Saylor urges bank custody and bitcoin-backed lending rules
Strategy's Michael Saylor has called for banks to hold bitcoin for customers and lend against it, and for regulators to review the capital rules he says hold such services back.
Key points
- Saylor set out the case in a policy essay published on Sept. 26.
- He wants banks to offer custody and credit against bitcoin, with owners choosing among competing providers.
- He cites the Basel framework's 1,250% risk weight for Group 2b cryptoasset exposures as an example of rules needing review.
- He asks regulators to treat custody, lending and direct exposure as separate activities.
- He also wants a practical path for insurers to hold digital capital on their balance sheets.
Michael Saylor has proposed rules that would let banks hold bitcoin for customers and lend against it, giving owners more ways to use their holdings. The Strategy Inc. executive chairman made the case in a policy essay dated Sept. 26, according to Bitcoin.com News. Strategy is a public company with a large bitcoin treasury.
Custody means safeguarding an asset on a customer's behalf. Lending against bitcoin would let an owner pledge holdings as collateral and take out a loan without selling them straight away. The owner would keep exposure to bitcoin's price, while the lender would have to manage the risk that the collateral falls in value.
Saylor describes bitcoin as digital capital and expects bank adoption to drive industry growth. His argument extends an earlier case for bringing bitcoin into banks and capital markets. In the essay's banking section he focuses on what institutions could offer owners directly: custody, financing and a choice among competing providers.
What banks could offer
The choice between holding bitcoin directly and using a custodian is one of five rights he proposes for digital assets. Saylor says owners should be able to hold assets themselves or pick a provider. More banking options, in his view, would make bitcoin useful for customers who want financial services alongside ownership.
Banks face different risks when they safeguard an asset, lend against it or buy it for their own balance sheets, and Saylor argues regulation should treat those activities separately. He calls for a review of accounting, supervisory and capital rules that he believes make bitcoin services unnecessarily difficult. As one example he cites the Basel framework's 1,250% risk weight for Group 2b cryptoasset exposures, a category for cryptoassets that fail the framework's classification conditions and hedging recognition criteria.
A risk weight affects how much capital a bank must hold against an exposure; it is not a 1,250% tax or charge on a customer loan. The classification covers specified bank exposures and should not be read as a single rule governing every custody arrangement or bitcoin-backed loan. Saylor wants policymakers to assess the activity and its actual risks when setting requirements. His proposal does not remove the need for banks to evaluate collateral, protect customer assets or manage losses.
Capital rules under review
Insurance companies should also have a practical way to incorporate digital capital into their balance sheets and products, according to Saylor. That proposal concerns what insurers might be permitted to hold or offer, and is separate from his request on bank custody and lending rules. The essay assigns Treasury and banking regulators a role in establishing paths for custody and credit, which would determine how institutions participate and which risks they bear. Saylor's case ultimately rests on access: if more institutions provide custody and financing, an owner may be able to compare terms and use bitcoin as collateral without first selling it.