MicroStrategy Co-Founder Michel Saylor on How Collapse of FTX Will Impact Crypto Space

On Friday (11 November 2022), Michael Saylor, Co-Founder and Executive Chairman at business intelligence software company MicroStrategy Inc. (nasdaq: MSTR), was affected what the ripple effects of the collapse of FTX would be.

It is worth remembering that on 11 August 2020, MicroStrategy announced via a press release that it had “purchased 21,454 bitcoins at an aggregate purchase price of $250 million” to use as a “primary treasury reserve asset.”

Saylor said at the time:

“Our decision to invest in Bitcoin at this time was driven in part by a confluence of macro factors affecting the economic and business landscape that we believe is creating long-term risks for our corporate treasury program ? risks that should be addressed proactively.“

Since then MicroStrategy has continued to accumulate Bitcoin and its former CEO has become one of Bitcoin’s most vocal advocates. MicroStrategy’s latest $BTC purchase, which Saylor tweeted about on 20 September 2022, means that the firm is now HODLing around 130,000 bitcoins, which were “acquired for ~$3.98 billion at an average price of ~$30,639 per bitcoin.”

Anyway, on Friday (11 November 2022), Saylor had this to say during an interview on CNBC’s Squawk on the Street:

“I think this week highlights the virtues of Bitcoin as much as it exposes the fragility of the crypto ecosystem. Bitcoin’s a commodity you can self custody without an issuer. The vast majority of all the crypto tokens out there are unregistered securities trading on unregulated exchanges, and they’re fairly centralised.

“And so what could go wrong? Well, we saw what could go wrong if a centralised token trading on unregistered exchange blows up this week. I think that Bitcoiners have been predicting this for a long time. Speaking for all the bitcoiners, we feel like we’re trapped in a dysfunctional relationship with crypto, and we want out…

“I think the industry needs to grow up, and the regulators are coming into this space. And what the world wants is digital assets and digital commodities and digital securities, but there’s no way to register a digital security. There’s no clear guideline, a roadmap for a designating a digital commodity. The world wants a trillion dollars of digital currency in the form of the USD stablecoin…

“And so I think that the regulatory intervention of late has been all negative, like enforcement, but the marketplace is waiting for the regulators to say ‘this is how you register a digital currency’, this is how you register a digital security or a digital commodity’…

“And instead of saying all the crypto exchanges should register, we need to get the crypto exchanges registered because the future of the industry is registered digital assets trading on regulated exchanges where everyone has the investor protections they need and the investors understand the difference between Bitcoin and a stablecoin and a security token…

“I think it’s definitely going to the strength in the hand of the regulators. It’s going to accelerate their intervention… And there’s regressive regulation, which is to say ‘you can’t really do anything’, and that’ll contract the industry… but there’s a progressive regulation, which says ‘this is a path to register a digital security, a digital currency, a digital token, and your digital exchange’.

“If there is progressive regulation, then I think you won’t see 20,000 tokens, you’ll see dozens but there’ll be properly registered tokens. The industry is going to grow much more rapidly. And ultimately, we’re moving from the entrepreneurial stage where this was a wild west offshore where anything goes to an institutional digital asset stage… and we’re all just going to grow up and the world is going to benefit from that.“

And this was gold bug (and Bitcoin perma-bear) Peter Schiff’s response to Saylor’s CNBC interview:

On 1 November 2022, Saylor talked about Bitcoin’s Lightning Network during his firm’s Q3 2022 earnings call.

Anyway, according to the transcript of the Q3 2022 Earnings Call by The Motley Fool, Saylor said:

“Block upgraded Cash App and Cash up is a 40 million user type mobile application, and they upgraded it in their support of Lightning. So now they can send and receive lightning to Cash App mobile application instances. And they did it with a universal barcode.

“And so, that means that I can hold the barcode up on my phone, and you can scan it, and it will either send a Bitcoin on the base layer, the Layer 1, if that’s what you requested or it will send it on the Lightning layer. We’re already seeing this create a massive amount of enthusiasm in the Lightning development community.

“It’s launched a lot more lightning wallets. It’s launched a lot more vendor interest in taking Bitcoin as lightening payments. And One of the more interesting stories right now is a supermarket chain call Pick-N-Pay, all around South Africa. Pick-N-Pay rolled out Lightning payments to 40 of their stores in production as the second stage of their Bitcoin adoption.

“And that appears to have been successful. There are a lot of videos circulating around and people going in and paying in a matter of seconds via Lightning transactions off of Android and iPhones, but the more important point is that their stated plan is to deploy Bitcoin Lightning support to 1,628 stores. So the broad-based adoption of Bitcoin as a medium of exchange via Lightning technology is now being taken seriously with the Cash App example, with the Pick-N-Pay example. This is getting a lot of attention in the community. And of course, the benefit to the retailer would be not only is it almost no fee, but it’s also instant settlement…

“And of course, it also becomes a matter of passion to the merchants because if the merchants can’t get paid in hard currency, and they have to go through multiple layers of credit, then their businesses are also at risk. So that’s a great fundamental development to Bitcoin, because traditionally, the view of Bitcoin is it’s just a store of value because it runs on a level one transaction network with only seven transactions a second.

“But now that people are saying that it’s infinitely scalable over the Lightning Network, it’s not just the store value. It’s a game-changing technology that you can build into a mobile app on billions and billions of mobile devices. And so, this is becoming very, very interesting and it’s changing the narrative with regard to Bitcoin.“

Saylor first tweeted about the Lightning Network on 26 May 2021: