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CEO of MicroStrategy Michael Saylor believes that traditional financial markets aren’t ready for Bitcoin-backed bonds yet. 

In an interview with Bloomberg, Saylor said that he wants to see Bitcoin-backed bonds sold like mortgage-backed securities but he warned that “the market is not quite ready for that right now. The next best idea was a term loan from a major bank.”

“MacroStrategy, a subsidiary of @MicroStrategy, has closed a $205 million bitcoin-collateralized loan with Silvergate Bank to purchase,” said the company in a Tweet. 

The comments came shortly after Microstrategy’s Bitcoin-specific subsidiary MacroStrategy announced a $205 million BTC-ccollateralized loan to buy more Bitcoin.

This is the first time MicroStrategy borrowed against its own Bitcoin reserves. The company holdings are currently valued around $6 billion, but the financial institutions is planning on buying more.

Saylor’s comments followed El Salvador’s decision to postpone the issuance of the $1 billion BTC-backed “Volcano Bond” on March 23. The Finance Minister of the country Alejandro Zelaya said that the delay in the decision is due to financial uncertainty in the international market, amid the Russian-Ukrainian war. 

“That’s a hybrid sovereign debt instrument as opposed to a pure Bitcoin-treasury play. That has its own credit risk and has nothing to do with the Bitcoin risk itself entirely.”

Saylor added that he is still extremely bullish on the long-term for Bitcoin-based bonds. The CEO argued that it’s a good idea that New York and other U.S. cities use Bitcoin as a debt instrument. 

“New York can issue $2 billion of debt and buy $2 billion worth of Bitcoin — the Bitcoin is yielding 50% or more, the debt costs 2% or less,” he said. 

Since its $250 million BTC investment in August 2020, MicroStrategy has been able to amass 125,051 BTC. At the current price of Bitcoin, the holdings are estimated around $5.5 billion. The financial institution has made a series of separate Bitcoin purchases in the last few years. Consequently, the company’s shares became closely correlated with the price of Bitcoin.