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- Strike’s new volatility-resistant Bitcoin loans shift price risk from borrowers to the lender’s capital providers.
- Tether provides the $2.1 billion credit facility for the program and co-designed the loan structure itself.
- The proposed merger would combine Strike, Twenty One Capital and mining company Elektron Energy into a single Tether-linked platform.
- The combined package covers every core banking function except the safety net carried by regulated banks.
This week’s headline belongs to Strike. On July 7, the company launched bitcoin-backed loans with no margin calls or price liquidations, promising that collateral would remain unchanged no matter how much bitcoin fell, as long as borrowers kept paying. Most of the coverage stopped there. The most important story lies at one layer, where the entity actually bears the risk. A loan that never clears on price means that someone holds unsecured debt during each withdrawal, and that someone, directly and indirectly, is Tether. The merger proposal submitted in April was a corporate gambit at the time. Yesterday’s launch is what production looks like: a stablecoin issuer that brings together deposits, credit, energy, mining, and capital markets into a working bank for the Bitcoin economy. No banking license. There is no central bank behind it. There is no deposit insurance in front of it.
The loan strike is sold, and Tether retains the risk
The Strike’s flip-resistant construction only works with deep pockets behind it. The borrower posts $100,000 in BTC on Loan-to-value product cap of 45% He takes $45,000 in cash. If Bitcoin drops 60% and stays there, the collateral covers about $40,000 for a debt of $45,000. Traditional crypto lender It was to be sold at 85% LTV. This is waited for, and the deficit is maintained until payment or maturity.
This patience is a balance sheet luxury, and a balance sheet that provides it is not Strike’s luxury. Jack Mallers announced a $2.1 billion credit facility that he said gives the company the ability to meet demand of any order size, and Tether participated in developing the volatility-resistant loan structure itself. Even Strike’s Proof of Reserves system, which allows borrowers to verify their collateral at a separate on-chain address, was created with the help of Tether. Strike arises and services. Tether guarantees tail risk. Traditional finance has a name for this division of labor: the originator model, which is the same design that mortgage banks run with warehouse lenders.
Six out of seven banking jobs already exist
Take the classic functionality of a commercial bank and compare it to what Tether is experiencing now. The gaps are few.
| Banking function | Cord version | size |
|---|---|---|
| Deposits | USDT is in circulation | The largest stablecoin by supply |
| Lending | CeFi Private Loan Book + Strike Credit Facility | Facilities worth $2.1 billion; Top 3 CeFi Lender |
| Payments and custody | Strike (proposed merger) | 95+ countries |
| Reserves/Treasury | Twenty One Capital BTC Treasury | Top tier corporate BTC holder |
| Physical infrastructure | E-Power Mining (Proposed Merger) | ~50 EH/s, ~5% of network hash rate |
| Capital markets | Planned securitization arm | Book of loans and mining revenue debts |
| Lender of last resort | no one | – |
Tether Investments published a proposal To combine Twenty One Capital with Strike and Elektron Energy, a mining operator that runs approximately 50 EH/s, about 5% of the Bitcoin network hash rate, into a single listed platform that integrates treasury holdings, mining, financial services, lending and capital markets. Mallers endorsed it from the stage at Bitcoin 2026. “Simply put, I think it’s a great idea,” he said, adding that his founding goal was always a Bitcoin company and not a payments app.
The terms and timelines are still unannounced, but the machinery is moving: In June, Tether appointed an additional independent director to XXI’s board to bring the audit committee back to SEC and NYSE independence standards, a kind of housekeeping that precedes a deal, not one that follows a dead deal.
Mallers described a process built on the securitization of loan books, the securitization of mining revenues, bitcoin-backed debt, and structured products. Packaging loans into securities and selling them later is how banks recycle capital and lend beyond their balance sheets. No one in the cryptocurrency space has run a device of this size. The combined Tether-Strike entity will be the first to try in terms of creation and distribution volume.
Three lenders now own 89% of the previously ten-strong market
The crypto credit market has recovered as of 2022 with far fewer players. According to Galaxy Research data, the three largest central lenders, which include Tether along with Galaxy and Ledn, have a combined loan book of $9.9 billion, roughly 89% of the CeFi lending market. Tether sits at the head of that group with its own book, and is now also funding the most aggressive product structure in the industry through Strike.
The pre-crash era looked different. Celsius, BlockFi, Voyager, and Genesis competed for the same borrowers, and when they fell, the survivors took on the customers and the market continued to function. The 2026 market has no such frequency. One of the dominant creditors is now behind deposits (USDT), wholesale credit (Strike Facility), and soon, if the merger is completed, will get a large slice of the mining hardware to secure the network itself. Bank supervisors use a term for an institution whose failure may extend to all layers of its system. Crypto has quietly grown without anyone signing on.
To be fair to the other side of the ledger: Tether reports annual profits in the billions in reserve revenue, giving it more loss-absorbing capacity than any cryptocurrency lender before 2022. The company can really afford to sit on loans underwater through a bear market. This is precisely what makes the promise of non-liquidation so credible today. This is also what makes the arrangement fragile in the only scenario that matters. The shock to Tether itself, whether from reserves, regulation, or redemption pressures, will now spread simultaneously to the stablecoin markets, CeFi’s loan book, Strike borrowers, and the mining fleet. Banks carry deposit insurance and central bank liquidity lines to solve precisely this correlation problem. This structure holds neither.
Both Ledn and Unchained now need $2 billion in backing of their own
For borrowers, none of this is visible. The loans get approved, the bitcoin stays in place, and the plumbing behind the $2.1 billion never shows up in the app. The market feels it differently. Competing lenders like Ledn and Unchained still operate liquidation models enabled by LTV, and matching Strike’s no-liquidation terms would require a capital partner willing to take on drawdowns measured in years, not hours. Few candidates exist. The likely outcome is consolidation around who has the biggest balance sheet, the opposite of what a still-scarred market wants come 2022.
The mechanics of Bitcoin’s spot price are also changing. Forced liquidations have amplified every major sell-off since 2018 by dumping collateral on exchanges at the worst possible moment. Loans that never sell for price eliminate one of those feedback loops. The selling pressure doesn’t go away; It turns into credit exposure that sits on Tether-linked balance sheets, waiting.
The open question lies on the desks of regulatory bodies, not on the screens of traders. US regulation of stablecoins has focused on reserve quality and redemption rights, not on what the investment arm of the issuer does with its profits. Lending billions against volatile collateral through affiliate platforms falls just outside this perimeter, and European supervisors under MiCA face the same gap. The proposed merger, which would put Electron founder Rafael Zagori in the chairman’s seat of a listed entity that brings together all these parts, will ultimately force a decision: At what point does the bitcoin economy’s largest private creditor become subject to something resembling banking supervision, and who moves first, Washington or Brussels?
