Strategy needs to monetize BTC after buying time with digital credit framework, Galaxy Research
Alex Thorn, the head of firmwide research at Galaxy Research, shared Galaxy’s analysis on X, adding his voice to the debate regarding Strategy’s newly announced Digital Credit Capital Framework.
The new rules have sparked a debate about whether or not they will solve the company’s capital-structure problems or simply delay them.
How does Strategy’s new capital framework operate?
Strategy (Nasdaq: MSTR) recently disclosed a new “Digital Credit Capital Framework” in a 8-K regulatory filing.
Cryptopolitan reported that the framework grants the company formal permission to sell up to $1.25 billion worth of Bitcoin. Notably, the firm is facing a massive unrealized loss of roughly $14 billion on its holdings of 847,363 BTC.
The framework creates a formal USD reserve policy that introduces revised dividend terms for its STRC preferred shares, and authorizes separate repurchase programs for both preferred stock and MSTR common shares at $1 billion each.
The board has kept aside the company’s $2.55 billion cash reserve, restricting its use to preferred dividends and debt interest.
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