“It’s a binary choice. Either you believe bitcoin is going to the moon or you believe it’s a Ponzi scheme. There’s no middle ground.”
Kwasi Kwarteng, the former U.K. Chancellor of the Exchequer who now chairs Stack, delivered that line at Consensus Miami on Wednesday, framing Bitcoin treasury companies’ bet on digital credit in terms that left little room for equivocation. The executives on stage with him largely agreed: they see a $3 trillion opportunity forming in Bitcoin-backed debt instruments, and they’re racing to claim territory before the field gets crowded.
The panel’s claims rest on a simple calculation. Global credit markets total roughly $300 trillion. If Bitcoin-backed credit captures just 1% of that, the implied demand hits $3 trillion, nearly double Bitcoin’s current market capitalization of approximately $2 trillion. Whether that 1% figure is conservative, aggressive, or wishful depends on how you view Bitcoin’s trajectory over the next decade.
From Zero to $10 Billion in Under Twelve Months
Matt Cole, Chairman and CEO of Strive, told the Consensus audience that Bitcoin digital credit has already crossed the $10 billion mark in issuance, all within roughly a year of the first products hitting the market. Cole called it “the second fastest product launch in capital markets history” outside of spot Bitcoin ETFs.
That’s a bold claim, but the context supports it. Strategy, the world’s largest publicly-listed Bitcoin holding firm, pioneered the category when it began structuring perpetual preferred stocks backed by its BTC holdings. The company has faced its own pressures recently (it floated selling part of its 818,334 BTC stash to cover $1.5 billion in dividend payments just last week), but the template it created is now being replicated across a growing cohort of treasury firms.
Strive followed with SATA, its own digital credit product. Cole described adoption as “exponential,” a word executives in any industry love to throw around, but the numbers here offer some justification. Moving from zero to $10 billion in issuance in under a year is unusual velocity for any fixed-income product, let alone one backed by an asset that still makes most institutional risk committees nervous.
The growth reflects a genuine structural need. Bitcoin holders have historically faced a choice: sell to generate income, or hold and sacrifice yield. Digital credit instruments offer a third option. By issuing perpetual preferred securities backed by BTC on the balance sheet, treasury companies can pay regular yields to investors while retaining their Bitcoin exposure. The instruments reduce direct price volatility for yield-seeking investors while keeping the issuer long Bitcoin.
How Digital Credit Actually Works
The mechanics borrow from traditional structured finance, but the collateral is different. In conventional corporate credit, debt is typically backed by a company’s revenue streams, cash flows, or hard assets like real estate and equipment. Creditworthiness depends on the issuer’s ability to generate income to service the debt.
Bitcoin-backed digital credit flips that model. The debt is secured by BTC sitting on the treasury company’s balance sheet, not by operating cash flows. This creates a different risk profile. Investors aren’t betting on management’s ability to execute a business plan; they’re betting on Bitcoin’s value holding up over time.
The instruments are typically structured as perpetual preferred stocks. “Perpetual” means there’s no fixed maturity date when principal must be repaid. “Preferred” means holders have priority over common shareholders if the company liquidates, though they rank below traditional creditors. The preferred shares pay a regular yield, giving investors income without requiring them to sell the underlying BTC.
This structure appeals to investors who want Bitcoin exposure without the gut-wrenching volatility of spot holdings. If you’re an institution with a mandate to generate consistent income, owning BTC directly is difficult to justify. But a preferred security paying 6% or 8% annually, backed by Bitcoin collateral, might fit into an income portfolio even if the underlying asset fluctuates.
The risk, of course, is that Bitcoin’s price could drop sharply enough to impair the collateral. If BTC falls 50% and stays there, the preferred shares become undercollateralized. How issuers would handle that scenario remains somewhat theoretical, given the market’s youth.
The 1% Thesis and Its Assumptions
Kwarteng and Cole both anchored their $3 trillion projection on the 1% capture rate: if Bitcoin-backed instruments take just one percent of the $300 trillion global credit market, the math works out. Cole said explicitly: “I don’t think that’s crazy.”
Is it crazy? That depends on several assumptions that the panel mostly left implicit.
First, the $300 trillion figure includes sovereign debt, investment-grade corporate bonds, high-yield bonds, private credit, consumer loans, and a range of other instruments. Most of this market has nothing to do with Bitcoin and likely never will. German government bonds aren’t going to be replaced by BTC-backed perpetual preferreds. The addressable market is probably a subset of the total, though exactly which subset is unclear.
Second, the projection assumes Bitcoin becomes a broadly accepted reserve asset, not just among crypto-native firms but in mainstream finance. Kwarteng made this assumption explicit: “If bitcoin does become a global financial currency, which I think it will, there’s room for a lot more bitcoin treasury companies.” That’s a big “if.”
Third, the math implies that $3 trillion in digital credit demand would require roughly 1.5 times Bitcoin’s current market cap worth of BTC to serve as collateral (assuming overcollateralization, which most structured products require). Either Bitcoin’s price rises substantially, or the number of treasury companies holding BTC expands dramatically, or both.
Kwarteng offered a data point on the supply side: there are currently about 200 Bitcoin treasury companies globally, compared to 5,000 banks in the U.S. alone. He cited Blockstream CEO Adam Back as the source of that figure. The implication is that the treasury company universe has enormous room to grow, which would in turn support more digital credit issuance.
New Players and Different Approaches
The panel highlighted how different firms are positioning themselves in this emerging market.
Katherine Dowling, president of Bitcoin Standard Treasury Company, said her firm is preparing to bring roughly 30,000 BTC onto its balance sheet and is “actively looking at digital credit as the next step.” She emphasized that the company’s CIO brings a structured finance background specifically to evaluate these products. “I think it’s tremendously important,” she said of digital credit.
Dowling also hinted at product diversification. “You have to create that balance and listen to what the market wants, and also see what the market can bear and can offer for you,” she explained. Different investors have different needs. Some want maximum yield, some want maximum safety, some want liquidity. A mature digital credit market would presumably offer a range of products along that spectrum, just as traditional credit markets do.
Amanda Fabiano, COO of Nakamoto, described a different approach. Rather than issuing its own perpetual preferred stock, Nakamoto built a fund that gives institutional investors access to digital credit from multiple issuers. The fund wrapper solves a practical problem: many institutions cannot buy these instruments directly due to custody limitations, mandate restrictions, or regulatory constraints. A fund structure lets them participate indirectly.
“I do think there will be additional treasury companies that issue these, and we will assess which ones go in the fund and which ones don’t,” Fabiano said. Nakamoto recently acquired BTC Inc. And UTXO Management, a firm managing Bitcoin investments for 210k Capital. The acquisitions suggest Nakamoto is building infrastructure for a larger institutional Bitcoin business, with digital credit as one component.
Fabiano noted that Nakamoto is “still weighing” whether issuing its own preferred stock makes sense. The company operates as an operating company with a treasury underneath, rather than as a pure-play treasury firm like Strategy. That structure may create different incentives around capital allocation.
The Institutional Plumbing Problem
One reason digital credit has grown so quickly is that it solves a genuine distribution problem for Bitcoin exposure.
Spot Bitcoin ETFs, which launched in January 2024, opened the door for institutions to hold BTC through familiar brokerage accounts. But ETFs are equity-like instruments. They don’t generate yield, and they expose holders to Bitcoin’s full price volatility. For a pension fund or insurance company with liability-matching requirements, owning a spot ETF is difficult to fit into an investment policy.
Digital credit offers something different: regular income payments plus (theoretically) lower volatility than spot BTC, thanks to the structural priority of preferred shares over common equity. It’s not a bond in the traditional sense, since there’s no maturity date and no contractual claim on operating income. But it behaves somewhat like a bond from an accounting and portfolio construction standpoint.
This matters because most institutional capital is managed under rules that favor fixed-income instruments. Insurance companies must match long-term liabilities with stable cash flows. Pension funds need predictable income to pay retirees. Endowments and foundations often have spending rules tied to investment income. Digital credit lets these institutions touch Bitcoin economics without holding an asset that might drop 40% in a quarter.
The April news that Moody’s rated the first Bitcoin-backed bond deal marked another step in this institutionalization process. A credit rating from a recognized agency allows instruments to meet the investment-grade thresholds that many institutional mandates require. Without a rating, many pension funds and insurance companies simply cannot buy the product, regardless of its merits.
The 200-Versus-5,000 Framing
Kwarteng’s comparison of 200 Bitcoin treasury companies to 5,000 U.S. banks carries an implicit argument: the Bitcoin treasury industry is in its infancy, with room for 25x growth just to match the density of traditional banking.
But the comparison is imperfect. Banks provide a range of services beyond holding assets: payments, lending, deposit-taking, trade finance, foreign exchange, derivatives. Most Bitcoin treasury companies do one thing, hold BTC, and issue securities against that holding. The business model is narrower, which might limit how many firms the market can support.
On the other hand, treasury companies have emerged across different geographies and regulatory regimes. A treasury firm incorporated in Switzerland faces different rules than one in Singapore or the Cayman Islands or the U.S. This jurisdictional fragmentation might actually support more entities, since different investors prefer different domiciles.
The broader point stands: if Bitcoin continues its trajectory toward mainstream financial acceptance, the infrastructure built around it will grow proportionally. Digital credit is one layer of that infrastructure. Treasury companies are another. Custodians, exchanges, prime brokers, fund administrators, and rating agencies are filling in other roles. The ecosystem is still sparse compared to traditional finance, which supports the growth thesis even if specific projections like “$3 trillion” are speculative.
What Could Go Wrong
The panel at Consensus was, predictably, bullish. Executives running Bitcoin treasury companies have every incentive to talk up the asset class they’re building. But the risks are real and worth naming.
The most obvious is Bitcoin price collapse. Digital credit instruments are backed by BTC. If Bitcoin drops 60% and stays down for an extended period, the collateral underpinning these securities becomes impaired. Perpetual preferred holders might find themselves holding paper that yields 7% on a collateral base worth half of what it was at issuance. The instruments might not default in a technical sense, since there’s no maturity date, but their market value would crater.
Structural complexity is another concern. Some of these instruments are genuinely novel, without precedent in traditional markets. How would a bankruptcy court treat a perpetual preferred backed by Bitcoin? How would cross-border insolvency rules apply if the issuer is in one jurisdiction, the Bitcoin custodian in another, and the investors in a third? These questions haven’t been tested in litigation.
Regulatory risk persists despite the generally favorable U.S. posture toward crypto in 2026. A future administration could tighten rules on digital asset securities, complicate custody arrangements, or impose capital requirements that make treasury company business models uneconomic. The digital credit market has grown during a friendly regulatory window; that window might not stay open.
Finally, there’s the issue of crowding. If dozens of treasury companies all issue perpetual preferred securities backed by Bitcoin, are they really differentiated products? Or do they become commoditized, competing primarily on yield, which compresses margins and forces riskier behavior? The panel didn’t address this, but it’s a question that will matter as the market matures.
A Market Forming in Real Time
The executives at Consensus are building an asset class from scratch. Digital credit didn’t exist two years ago. Now it’s a $10 billion market with multiple issuers, institutional funds providing access, and major rating agencies beginning to engage. The trajectory is genuinely unusual.
Whether it reaches $3 trillion depends on factors largely outside these executives’ control: Bitcoin’s price path, regulatory evolution, institutional adoption curves, and competitive dynamics that haven’t yet emerged. The 1% capture rate thesis is plausible but unproven. A lot has to go right for Bitcoin-backed credit to become a significant slice of global fixed income.
But Kwarteng’s binary framing captures something true about the bet these firms are making. If Bitcoin becomes a permanent feature of the global financial system, the infrastructure built around it, including digital credit, will be worth far more than current valuations imply. If Bitcoin fades or collapses, most of this infrastructure becomes worthless. There’s not much middle ground.
The Bitcoin treasury tracker shows that public companies now hold hundreds of thousands of BTC on their balance sheets. Those holdings are the raw material for digital credit issuance. As long as the treasury company model persists and expands, the $10 billion digital credit market has room to grow, even if the $3 trillion ceiling remains a distant aspiration.
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This content is educational, not financial advice. Digital asset investments can lose value. Research thoroughly before investing.
