Bitcoin-Backed Digital Credit and the Future of Yield

Summary

The February 25, 2026 panel from the MicroStrategu annual conference features Dylan LeClair, Ben Werkman, and Matt Cole examining how Bitcoin-backed digital credit instruments reshape corporate finance and investor portfolios. They argue that pairing long-duration Bitcoin treasuries with perpetual or long-dated liabilities creates mispriced, income-producing assets that remain resilient even in a bear market. The discussion highlights emerging demand from institutions and retirees, regulatory experiments in markets such as Japan, and the prospect of structured products and on-chain wrappers built atop this new credit layer.

Take-Home Messages

1. Balance-Sheet Credit: Digital credit instruments are underwritten primarily on existing Bitcoin balance sheets rather than uncertain future cash flows, reframing traditional credit risk.
2. Duration Matching: Pairing long-duration Bitcoin treasuries with perpetual or long-dated liabilities lets issuers plan over 5–15 year horizons while maintaining income for investors.
3. Track Record and Bear Markets: The current bear market functions as a live stress test of whether issuers can keep paying dividends without selling Bitcoin, a key prerequisite for institutional approval.
4. Investor Base Expansion: Strong early demand from both institutions and retirees suggests digital credit can fit hedge funds seeking alpha and 60/40 income portfolios seeking higher yields.
5. Platform for Innovation: Once multiple issuers establish scale and liquidity, digital credit becomes a base layer for buffered, levered, and on-chain structured products that could attract substantial bond-market capital.

Overview

Cole argues that digital credit solves a duration mismatch by pairing a long-duration Bitcoin treasury with a similarly long-duration liability, allowing issuers to plan in decades instead of quarters. He describes these balance-sheet-focused instruments as deeply mispriced, because markets still treat them like conventional corporate credit despite very different collateral. From his perspective, underwriting a “balance sheet company” rather than speculative cash flows materially changes how investors should view risk and reward.

Werkman explains that Strive’s SEDA issuance attracted both institutional and retail demand, including oversubscription from buyers seeking yield enhancement. He notes that digital credit can strip off an attractive slice of expected Bitcoin appreciation and convert it into predictable income for hedge funds and near-retirees moving into 60/40 portfolios. At the same time, he stresses that many large allocators will wait for roughly three years of dividend history before committing meaningful capital.

Cole emphasizes that bear markets are an assumed feature of Bitcoin exposure and that digital credit must prove itself by maintaining payments through such environments. He highlights structural tools such as cash reserves and improved preferred designs that help issuers defend par and avoid forced Bitcoin sales. Successful navigation of this cycle, he argues, should compress cost of capital and support issuance growth from billions into the tens or hundreds of billions.

LeClair describes MetaPlanet’s strategy of remaining perpetually long Bitcoin and short fiat through a mix of common equity and Bitcoin-linked preferreds in Japan. He recounts how regulators and lawyers in that market had never encountered adjustable-rate, Bitcoin-backed preferreds, requiring extensive education before shareholders could approve the structure. Looking ahead, the panel expects growing secondary-market liquidity and an expanding ecosystem of structured products and on-chain wrappers built atop these instruments once awareness among advisors and allocators catches up with the underlying innovation.

Implications and Future Outlook

Digital credit backed by Bitcoin treasuries could accelerate a shift away from cash-flow-based corporate lending toward balance-sheet-based credit underwriting. If issuers demonstrate reliable interest payments through multiple bear markets, spreads over the risk-free rate are likely to compress as institutional allocators grow comfortable with the structure. Over the next several years, this re-rating could redirect substantial capital from traditional corporate and private credit into Bitcoin-linked instruments.

For income-focused investors, including large cohorts entering retirement, digital credit offers a potential way to raise portfolio yields without relying on opaque private vehicles or leveraged strategies. As more products list across jurisdictions and build track records, intermediaries may begin to package them into model portfolios and retirement solutions alongside conventional bonds. If this occurs, Bitcoin exposure will enter mainstream balance sheets not only through price speculation but as a component of stable income design.

Some Key Information Gaps

1. How should Bitcoin treasury companies optimally structure duration-matched liabilities to support 5–15 year strategic planning? Clarifying optimal maturity profiles, coupon mechanisms, and contingency plans is essential to ensure that digital credit strengthens rather than destabilizes issuer balance sheets.
2. What metrics best demonstrate bear market resilience and reliable interest payments for digital credit issuers? A commonly accepted set of indicators would allow investors and regulators to evaluate whether products have genuinely passed stress tests without forced Bitcoin sales.
3. Which evidence thresholds (e.g., three-year dividend history) are most decisive for pensions and other large institutions considering digital credit? Mapping these thresholds would help issuers time capital raises and outreach campaigns to align with institutional governance processes.
4. How does the risk-adjusted performance of Bitcoin-backed digital credit compare to private credit across different macro and AI disruption scenarios? Systematic comparisons are needed to judge whether digital credit offers superior resilience as traditional business models face rapid technological change.
5. What liquidity thresholds and trading patterns signal that digital credit markets are deep enough for large institutional allocations? Establishing clear benchmarks for daily volume, bid–ask spreads, and market depth would guide both issuers and allocators in scaling exposure responsibly.

Broader Implications for Bitcoin

Repricing Credit Around Balance-Sheet Strength

Bitcoin-backed digital credit highlights a shift from underwriting uncertain future earnings to underwriting transparent on-balance-sheet assets. If this model scales, lenders and regulators may reevaluate traditional ratings frameworks that prioritize cash-flow projections over reserve composition. Over time, sovereigns and corporations could face competitive pressure to hold scarce digital assets to maintain affordable access to credit markets.

Retirement Portfolios and Bitcoin-Linked Income

As large populations transition into retirement, demand for higher-yielding but understandable income products will intensify. Digital credit structures that deliver cash flows from Bitcoin treasuries could become a bridge between conservative allocation norms and exposure to a new monetary asset. This may normalize Bitcoin within pension, insurance, and advisory channels, shifting it from a speculative bucket into the core income toolkit.

Competition With Private Credit and Illiquid Yield Products

Private credit has grown rapidly on the promise of enhanced yields, but concerns about opacity, liquidity, and disruption risk are mounting. Transparent, exchange-traded digital credit that clearly discloses collateral and trading activity could attract allocators away from illiquid vehicles. Over the next 3–5 years, this competition may drive better disclosure standards and risk pricing across the broader credit spectrum.

Globalization of Bitcoin-Backed Corporate Finance

Experiments in markets such as Japan indicate that regulatory systems are beginning to accommodate Bitcoin-linked preferreds and perpetual instruments. As more jurisdictions approve similar structures, multinational issuers will be able to raise balance-sheet-based capital across currencies and legal regimes while anchoring reserves in Bitcoin. This could gradually decouple corporate funding options from domestic banking conditions and deepen global demand for Bitcoin as collateral.

Structured Products and Tokenized Credit Layers

Once digital credit reaches sufficient scale and liquidity, financial engineers are likely to build buffered, levered, and currency-hedged products targeting specific risk appetites. On-chain wrappers around regulated preferreds could allow smaller investors and global participants to access these yields with programmable settlement and composability. Such layering will blur boundaries between traditional markets and Bitcoin-native infrastructure, raising new questions about leverage, governance, and systemic risk.