Short Term Bitcoin Bonds Issuance Being Contemplated By BitMEX Confirms Arthur Hayes


Recently, the co-founder and CEO of crypto derivatives exchange BitMEX, Arthur Hayes has confirmed that the company is in talks about issuing a short-term Bitcoin bond.

Arthur says:

“One thing that I have started exploring, on a very small scale, is how do we generate income natively in first Bitcoin—because that's obviously the biggest coin out there—for people who hold Bitcoin. If I hold some Bitcoin and I want to generate some income from it, it's extremely difficult. It means I have to lend it to somebody unsecured… and default rates are quite high.

So, one of the underpinnings of the fixed income markets in traditional space is that high-quality corporates that everybody knows and trusts issue commercial paper, short-term paper, and usually U.S. dollars, for the funding needs of their company. Now, usually, they don't need this money. It's more that it's operationally and financially efficient for them to borrow money instead of using their retained earnings.”

What he thinks is that this phenomenon should be replicated in the crypto ecosystem as well. He wants to create a future where the highest quality exchanges and miners issue short-term Bitcoin bonds.

“So, let's say you want to buy some 30-day paper. Why can't you buy a BitMEX 30-day zero-coupon bond that yields some rate of interest that reflects the market's determination of our credit risk? Or the Coinbase, or the Kraken, or the Bitmain… that probably don't need the money but they have a reputation to uphold. Do I want to default on the ecosystem? So, I'm more inclined to pay back this money because I want to keep the good name of BitMEX in good standing.”

Taking this into account, if BitMEX starts to have an almost risk-free curve of interest for Bitcoin, then riskier borrowers can start to price themselves against the rock-solid companies in the ecosystem, and people can start to select.

If people want to take a little more risk, maybe a speculative project. They are going to build X, and they need a 100 bitcoin, and they are paying a 20% per annum yield.

He further clears the vision of the project by saying:

“Now, we're really creating a credit curve for Bitcoin, and people can start natively borrowing it, and creating businesses around, in the crypto space, borrowing crypto, having no outside currency exposure. That really helps generate this ubiquitousness of the use of Bitcoin and other cryptocurrencies, and that really takes our industry forward.”

When asked the question of where Hayes sees bitcoin long term and what he thinks the bitcoin price target will be. Hayes explains that he thinks “financial privacy will be dead within five years” explaining that governments want to control everything, including money.

Hayes explains that he thinks crypto will be the last frontier for financial privacy, concluding that Bitcoin could reach “say $50,000 in the next two to five years, it could go higher if the world plays out the way I think it will play out. ”

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