Michael Saylor, Executive Chairman of MicroStrategy, has proposed regulatory changes to enable banks to offer custody and lending services for bitcoin. In a policy essay published on September 26, Saylor argues that workable rules could allow financial institutions to compete for bitcoin owner business by safeguarding holdings and extending credit against them as collateral.
Custody means safeguarding an asset on a customer's behalf. Lending against bitcoin would allow an owner to pledge holdings as collateral and receive a loan without immediately selling them, retaining exposure to bitcoin's price while the lender manages the risk of collateral value decline.
Regulatory Framework Concerns
Saylor contends that current banking regulations treat different bitcoin-related activities inconsistently. He argues that regulators should distinguish between custody, lending, and direct bank exposure, and review the accounting, supervisory, and capital rules governing these activities.
He specifically cites the Basel framework's 1,250% risk weight for certain cryptoasset exposures as an example of rules that make bitcoin services unnecessarily difficult for banks. According to Saylor, this classification affects how much capital banks must hold against such exposures.
Saylor's proposal does not eliminate the need for banks to evaluate collateral, protect customer assets, or manage losses. Instead, he calls for regulatory paths he considers commercially workable.
Broader Market Access
Saylor's case centers on expanding access to financial services. If more institutions can provide custody and financing, bitcoin owners may be able to compare terms and use their holdings as collateral without selling them.
Saylor also proposes that insurance companies should have a practical path to incorporate digital assets into their balance sheets and products, arguing that greater institutional participation could improve services available to bitcoin owners.
