A new class of Bitcoin-backed preferred stock has quietly become one of the most talked-about yield products in public markets. The dividends run into double digits, the tax bill is deferred
A new class of Bitcoin-backed preferred stock has quietly become one of the most talked-about yield products in public markets. The dividends run into double digits, the tax bill is deferred for years, and the companies issuing these shares are iterating faster than the rest of the market has caught up to.
Matt Cole, CEO of Strive, joined TheStreet Roundtable to explain how it works.
Strive is a publicly listed Bitcoin treasury company, trading on the Nasdaq under the ticker ASST, that holds about 19,032 Bitcoin and is operating against a multibillion-dollar funding plan.
Its variable-rate perpetual preferred share, SATA, was modeled on Strategy's STRC preferred, then built further on top of it.
Cole argues these Bitcoin-backed preferreds are forming a new category he calls "digital credit," where the right strategic move is not to produce accounting profits but to engineer instruments that maximize Bitcoin per share while letting holders defer taxes for years.
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A preferred stock sits between a bond and common stock. It pays a set dividend like a bond, but it has no maturity date, which is what "perpetual" means, so the company can keep it outstanding indefinitely. A variable-rate preferred lets the issuer adjust that dividend over time.
What makes SATA and STRC unusual is what backs them. Instead of a bank's loan book or a utility's cash flows, the collateral behind the dividend is a balance sheet stacked with Bitcoin. That is the "digital credit" idea: bond-like income, funded by a Bitcoin treasury.
Strategy, formerly MicroStrategy, launched STRC, its Variable Rate Series A Perpetual Stretch Preferred Stock, designed to trade near a $100 par value while paying a monthly dividend.
The company raised the STRC dividend from 9.00% at issuance to 11.50% annualized, effective for monthly periods starting March 1, 2026. Across its full stack of preferred shares, Strategy has paid more than $413 million in cumulative distributions, a blended rate of about 9.6%.
Strive's SATA followed the same blueprint, then went further. The dividend now sits at 13.00% annualized, and beginning June 16, 2026, SATA becomes the first listed security in U.S. capital markets history to pay cash dividends every single business day. Daily compounding pushes the effective annual yield to roughly 13.88% across about 250 trading days.
Cole compared the pace of iteration to Apple.
"Sailor has called them the iPhone moment. Well, there was an iPhone one, there's an iPhone two, there's an iPhone three, there's apps within the iPhone," he said.
One of the most underappreciated features of these instruments is the tax treatment. SATA dividends are classified as "return of capital," or ROC, rather than ordinary income or qualified dividends.
"An investor can buy SATA and they will not have to pay any taxes until all $100 that they invested to buy a share of SATA has been returned to them through dividends,” Cole explained.
In plain terms, an investor who buys one share at $100 receives roughly $13 a year. They pay zero federal income tax on those dividends until cumulative payouts cross the original $100 cost basis, which at a 13% rate takes about seven to eight years.
That classification is only possible because Strive and Strategy do not report a net profit. If either issuer became profitable, the dividends would shift to ordinary tax treatment.
Investors will still owe tax when they sell, Cole said.
"In most cases, that tax is deferred rather than eliminated. Return of capital distributions generally reduce an investor’s tax basis, which can result in a larger capital gain when SATA is sold. Investors may also be able to further defer that tax by continuing to hold SATA, and under current law, shares passed to heirs may receive a step-up in basis.”
The most counterintuitive part of the conversation was Cole's admission that profitability is technically within reach but strategically undesirable.
"It would be achievable for both Strive and Strategy to have net profits tomorrow. It's very achievable. You can push on top of a Bitcoin balance sheet, financialization, monetization through derivative strategies and shoot out a profit,” he said.
If Strive turned profitable, the digital credit thesis breaks. The tax-deferred treatment is central to the pitch for buying STRC and SATA, and it depends on the issuer reporting no net income.
"My belief is that profit would be overweighed by the demand destruction in digital credit, and that digital credit is actually our core product,” Cole argued.
The metric Cole and Saylor optimize for is Bitcoin per share. Since launching SATA and STRC in late 2025, the two preferreds have helped their companies accumulate 131,232 Bitcoin between them.
Strive's balance sheet holds roughly 19,032 Bitcoin, which ranks it among the ten largest corporate holders.
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There is now a publicly traded, dollar-denominated way to capture double-digit yield with the tax cadence of an unrealized gain, as long as the underlying issuer keeps reinvesting into Bitcoin and posting a loss.
The yield is sustainable only as long as the issuer can keep issuing new equity and preferred shares at favorable terms. A sustained drop in Bitcoin, or a closing of the equity market for these issuers, would test the model.
The bigger signal is structural. A second issuer (Strive) replicating Strategy's playbook and then innovating on it (daily dividends) means this is no longer a single-company novelty. It is a product category, and Cole hinted more is coming.
"Innovation will continue to happen within the SATA products and on top of them as well," he said.
