Michael Saylor: Large banks such as JPMorgan Chase, Citi, New York Mellon, and Wells Fargo have begun to issue “Bitcoin-backed loans.”

Michael Saylor, the founder of Strategy Micro Strategy, broke the shocking news that many large banks on Wall Street are opening Bitcoin mortgage loans!
(Preliminary summary: Michael Saylor responded to "Micro strategies may be eliminated from the MSCI index": Our Bitcoin business is unique, and the index classification cannot be defined)
(Background supplement: Michael Saylor commented on the decline of Bitcoin: If you want to ride on the rocket, you have to bear the pressure! The plan to buy BTC will be announced next week)

Contents of this article

In just half a year, Wall Street's attitude towards Bitcoin has turned 180 degrees. Michael Saylor, founder of Strategy, announced at the BTC MENA conference in Dubai on the 10th that 8 of the top 10 U.S. banks have officially provided Bitcoin mortgage loans. Digital assets, which Monger called "dead rat poison" at the time, have now become the underlying guarantee for traditional finance to bet on.

Big banks are rushing into Bitcoin loans

Michael Saylor said at the meeting that many large banks, including JPMorgan Chase, Citigroup, BNY Mellon, Wells Fargo, Bank of America, and Charles Schwab, have begun to issue credit using Bitcoin as collateral. Michael Saylor originally estimated that it would take 4 to 8 years for banks to accept Bitcoin, but it actually took only 6 months.

But it should be noted that Michael Saylor said that "many large banks" have begun to issue credit using Bitcoin as collateral. However, according to current public reports, there is only news about JPMorgan Chase "accepting BTC/ETH as loan collateral as soon as the end of the year", and it quotes sources. The bank itself refused to respond. It is planned or under evaluation and has been informally implemented. For reference: It is reported that JPMorgan plans to allow Bitcoin and Ethereum to be used as loan collateral before the end of the year, as soon as the end of this year!

As for BNY Mellon, Wells Fargo, Citigroup, Bank of America, Charles Schwab, etc., they have all been involved in crypto custody, ETF matching or tokenization exploration, but there has been no official announcement of "fully opening up Bitcoin as general credit collateral to institutions."

Basel III reform and Trump’s promotion of Bitcoin as a “Tier-1 Asset”

The key to the comeback lies in the Basel III reform that was implemented in July. In line with the Trump administration’s deregulation route, the Federal Reserve listed Bitcoin as a “Tier-1 Asset” on bank balance sheets and removed high capital reserve requirements. Michael Saylor described the move as:

A macro, political and structural transformation.

Low-interest leverage impacts the DeFi ecosystem

Traditional banks rely on their capital cost advantages to launch a “dimensionality reduction attack.” Currently, the annual interest rate of bank-side Bitcoin loans is 4% to 6%, and the loan-to-value ratio (LTV) is 50% to 70%; the average interest rate of the DeFi agreement on the chain is still higher than 8%, and it also comes with smart contract risks. Large custodian banks are rapidly attracting institutional and whale customers by taking advantage of asset security.

The most direct examples include: JP Morgan Chase established a US$10 billion special credit facility in October; PNC Bank announced on the 9th that it will provide spot transactions and US$2.5 billion in loans for private banking customers. Smart Money thus obtains lower leverage costs, posing positive competitive pressure on DeFi.