Strategy has approved a board-approved Bitcoin monetization program as part of a new capital management framework. It’s the first time the company has formally outlined how it could sell portions of its Bitcoin holdings to support shareholder returns and strengthen its balance sheet.
The Digital Credit Capital Framework allows Strategy to monetize Bitcoin to build US dollar reserves. Also to fund preferred dividend payments and interest obligations, and to repurchase preferred securities and MSTR stock.
The company said the framework is designed to increase financial flexibility while cementing Bitcoin as its main treasury reserve.
Strategy formalizes when Bitcoin can be converted into cash
The board approved a Bitcoin Monetization Program that authorizes management to sell Bitcoin under certain circumstances rather than requiring separate approval for each transaction.
Within this framework, Strategy can monetize Bitcoin to increase its US dollar reserve by maximum $1.25 billion. Also to maintain liquidity for preferred dividend and interest payments and to finance authorized repurchases of preferred securities and common stock.
Any Bitcoin sales outside of these defined purposes require additional board approval.
Executive Chairman Michael Saylor described the move as an evolution of the company’s capital strategy.
“Bitcoin is capital,” Saylor said. “Our Digital Credit Capital Framework allows us to convert that capital into productive support for shareholder value, while maintaining our long-term Bitcoin strategy.”
The company is shifting to active capital management
President and CEO Phong Le said Strategy is moving beyond simply raising capital to acquire Bitcoin, toward actively managing its capital structure.
In addition to the new framework, the company also created a $2.55 billion US dollar reserve, which is currently approx 17.4 months of preferred dividend and interest obligations. Including the authorized Bitcoin monetization capacity, Strategy estimates that coverage would increase to approx 25.9 months.
The board has also granted permission $1 billion of preferential repurchases of securities and $1 billion in MSTR buy back shares. This gives management additional flexibility to allocate capital depending on market conditions.
Bitcoin ownership remains unchanged
The announcement was accompanied by Strategy’s latest Bitcoin holdings update, which revealed that the company made no Bitcoin purchases during the reporting period.
The strategy continues to hold 847,363 BTCacquired for approx $64.5 billion at an average purchase price of $75,651 per Bitcoin. At current market prices, the holdings remain among the largest corporate Bitcoin government bonds globally.
Final summary
- Strategy approved a board-approved Bitcoin monetization program that will allow BTC sales to fund reserves, dividends and buybacks under a new Digital Credit Capital Framework.
- The company also disclosed a cash reserve of $2.55 billion, authorized $2 billion in buybacks and reported unchanged holdings of 847,363 BTC.