Meanwhile in the land of Bitcoin – the rewards of legitimacy
(image: rev.art)
A funny thing happened on the way to the Trump presidency. Early in the campaign, someone whispered in Trump's ear that about 50 million Americans had downloaded crypto wallets. It did not take political genius for Trump to promise this constituency the world, although it was clear from his gaffes at the time that he did not know much about crypto (he does now).
Kamala Harris was offered several opportunities to reach out to the crypto community. She declined. Given the small margin by which Trump was elected, one could make a strong argument that the election could have swung the other way had her advisors been more astute.
In any event, when Trump arrived in office, the payback machine swung into action. Since the birth of the crypto industry in 2010, the entire project had been treated by governments and institutions first with neglect, then derision, then resistance and then, finally, criminalization (yes, there are many crypto memes that start with "First they laughed at us..."). All of which, at least in the US, have disappeared in a puff of Trump smoke in 2025.
Here is a partial list of pro-crypto government actions:
- The first of multiple crypto ETFs was approved by the SEC late last year, leading to the launch of the first publicly traded US ETF by BlackRock in January 2025
- The IRS dropped its DeFi broker rule (April 2025)
- The DOJ National Cryptocurrency Enforcement Team was dissolved (April 8)
- The SEC and banks rescinded or eased multiple crypto stances including onerous crypto custody proscriptions (January 2025 – April)
- The SEC dropped major front-page lawsuits against Coinbase, Kraken, Ripple and others (March – April)
There's much more like this, but an internal memo from Deputy Attorney General Todd Blanche dated April 8th tells the whole story:
The DOJ will "... cease litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets."
Furthermore, prosecutors were specifically instructed to "no longer target virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or unwitting violations of regulations."
And so crypto has government approval but, with minimal regulation, is a new Wild West, with all the attendant extremes that this brings, from blistering technological and financial innovation to outright scammery. These are the birth pains of sudden legitimacy.
Which brings us to two interrelated stories, one from the pre-Trump world, and one that made headlines in the past week or so.
In 2020, an entrepreneur named Michael Saylor was the CEO of a small-cap public business intelligence software company called MicroStrategy. It had a market cap of about $1 billion. He was also deeply enamoured of Bitcoin and believed, with unshakeable confidence, that the price of Bitcoin would continue to rise indefinitely (albeit with volatility).
And so he invested $250 million of MicroStrategy's treasury into Bitcoin. And then he struck upon a startling idea. If he could find other people who believed in Bitcoin's long-term ascendant future but couldn't be bothered to deal with the steep learning curve of wallets and private keys, he would gladly buy Bitcoin on their behalf through MicroStrategy.
The sole purpose of the new Bitcoin division of MicroStrategy was to buy more Bitcoin - and hold it. And, in an effort to attract retail investors looking for exposure to Bitcoin, Saylor would sell shares in the corporation. They didn't have to buy Bitcoin; they just bought shares (everyone was familiar with shares). Much simpler. There turned out to be plenty of takers.
It was even smarter than that. Saylor also borrowed money from lenders at near-zero percent interest based on the rising value of his shares. The inducement was that, if Bitcoin's price rose, the lenders could swap the loans for issued shares. There turned out to be plenty of people wanting to take a punt on that too. The whole scheme created a 'flywheel' effect: convertible loans for Bitcoin purchases, shares for retail investors.
Pause here a minute. Issuing shares is supposed to be dilutive to individual share value, right? Not if the value of the shares continues to rise. Which is exactly what happened as Bitcoin's price went up. Those lenders who converted loans to shares got rich.
And Saylor just keeps on buying more Bitcoin.
Here is what happened – MicroStrategy went from a market value of $1 billion to $100 billion in 5 years. That is 100 times growth, making it one of the best performing shares in history. Just by borrowing money, selling shares and buying Bitcoin. Not only are Saylor's personal holdings now worth $8 billion, MicroStrategy is now one of the largest Bitcoin holders in the world, controlling 2.65% of its supply.
All this would have been a fabulous business story about a clever guy who built a handy bridge between Bitcoin trading and traditional public equity trading, making his shareholders rich in the process. Then Trump arrived - and retracted most of the restrictive legislation around crypto. This has removed a lot of uncertainty about Bitcoin's future. Which means more institutions are opening their wallets. Which means even more people believe the price of Bitcoin is going to go up.
On the 24th of April, a MicroStrategy copycat company, Twenty One Capital, was launched, with essentially the same strategy. It is not just any old company. Its shareholders are the very prestigious traditional investment bank Cantor Fitzgerald, the very deep-pocketed private equity company SoftBank, the very famous young crypto whiz Jack Mallers and the very dominant stablecoin company Tether.
They started with a war chest of $3.6 billion, all of which was used to buy Bitcoin. Buying Bitcoin is all the company will ever do on behalf of its shareholders. That is its raison d'être, although there are some mealy-mouthed promises of other crypto services to come. The significance of Twenty One Capital's entry into this space is not only the credibility and wealth of its shareholders but the melding of traditional financiers and crypto pioneers into a single investment proposition – the fruit of newborn Bitcoin legitimacy.
There are, of course, many who will scoff at this. Companies that simply borrow money to buy Bitcoin – I mean, what is that? But one only has to look at the deep and wide spread of companies whose sole job is to invest customers' money and provide a decent return – from high street banks and investment banks to various funds, forex traders, money markets and so on. Their single mission is finding a place to grow capital, whether in equity, debt, hybrids or other arcane instruments.
It seems to me that there is little difference. A new asset has arrived, it is legitimate, blessed by the US government, and the behemoth of traditional finance is now piling in to exploit it.
Steven Boykey Sidley is a professor of practice at JBS at the University of Johannesburg, columnist-at-large for Daily Maverick, and partner at Bridge Capital. His new book It’s Mine: How the Crypto Industry Is Redefining Ownership is published by Maverick451 in South Africa and Legend Times Group in Europe/UK. Copy edit by Bryony Mortimer.