Opinion: The definition of STRC, fundraising, some tax rules, and dividend liquidation

Author: Jiami Junior @oyoovi

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The essence of STRC is not bonds nor principal-protected wealth management, but a perpetual, floating-rate, cumulative dividend preferred stock at the Strategy parent company level. Its face value is $100 per share, but the IPO issue price is $90; dividends are paid monthly in cash. As of March 2026, the Strategy official page shows that the current annualized dividend rate for STRC is 11.50%, and this dividend rate can be adjusted monthly. More importantly, Strategy itself clearly states: STRC has no return guarantee, no liquidity guarantee, is not a deposit, not an FDIC-insured product, nor a security collateralized by Bitcoin holdings.

To put it simply, STRC is somewhat like: MicroStrategy’s community launched an ICO 2.0, raising the first funds at a 10% discount, then paying dividends to you, the coin buyer, monthly. The dividend amount and annualized yield are determined by the company, and as long as the secondary market has depth, you can exit steadily. This coin cannot be converted into equity, but if the system really fails, the company can sell assets and distribute the remaining assets to you in order (if any remain). More critically, this coin has an issuance expansion switch. You will notice that there is already a faint smell of algorithmic stablecoins. Of course, this is not a blockchain protocol version but a corporate law + capital market version.

Unlike algorithmic stablecoins, STRC is backed by a real listed company’s balance sheet, USD reserves, Bitcoin asset pool, and liquidation hierarchy. Its price anchoring, dividend adjustment, continuous issuance, and market acceptance logic indeed carry a shadow of a yield-stability mechanism.

I. Several dimensions defining STRC

1. Nature: A quasi-equity credit instrument, not a bond.

It is Variable Rate Series A Perpetual Stretch Preferred Stock, meaning “variable interest rate, Series A, perpetual preferred stock.” Perpetual means it has no maturity date; you cannot wait to get your principal back like a bond. Your legal position is that of a preferred stockholder, not a creditor. It ranks higher than common stock, STRK, and STRD dividends and liquidation, but lower than STRF, all existing and future debts, and at the subsidiary level, structurally subordinate to subsidiary debts and other liabilities.

2. Principal: Do not interpret as principal protection.

It explicitly states that STRC only has a priority claim on the company’s remaining assets but is not directly secured by Bitcoin assets. Therefore, it has a priority claim framework but no unconditional principal guarantee. If the company encounters problems and enters liquidation, you can only receive liquidation distribution after creditors and higher-ranking equity interests, from the remaining assets.

3. Dividends: Not derived from the product’s own income.

In other words, the high yield of STRC is not because the underlying assets naturally generate stable cash flow. Its high dividend rate is essentially a risk premium for holding this preferred stock based on MicroStrategy’s credit (you unconditionally trust me, I conditionally support you). This is also why STRC is often criticized for high-yield Ponzi-like behavior.

When buying STRC on the secondary market, as long as you buy before the ex-dividend date and hold until the dividend qualification date, you will receive that period’s dividend, without needing primary subscription rights. The prospectus clearly states that regular dividends are paid in cash, subject to board approval and paid as specified in the prospectus.

For example, according to the current public dividend calendar, market information shows that the dividend for the March 2026 period is scheduled for March 13, with the payout date on March 31. To receive this dividend, you generally need to buy before the market close on March 12; if you buy on or after March 13, you will be the previous holder and will receive the next period’s dividend.

4. Exit mechanisms

The first is selling on the secondary market: this is the most common exit method, but market prices are affected by interest rates, credit, liquidity, and company behavior expectations, and may be above or below 100.

The second is company voluntary redemption: after listing, the issuer can redeem at any time, in batches or all at once, at $101 plus accrued unpaid dividends; if the circulating volume drops below 25% of the original issuance, a clean-up redemption can be made; if a tax event occurs, a tax redemption can be made.

The third is in case of a fundamental change, holders can request a cash buyback, but this right is limited by the company’s ability to pay legally available funds. MicroStrategy defines a narrow scope for fundamental change: the first is a change of control; the second involves major transactions at the company level, such as the sale, lease, or transfer of all or substantially all assets to a third party, or all Class A common shares being exchanged for other securities, cash, or other property.

II. About STRC preferred stock issuance

IPO fundraising + subsequent ATM shelf issuance: approximately $5 billion total

1. Initial IPO fundraising status

Nominal amount (Notional) vs. actual proceeds

Notional is the nominal financing scale of this preferred stock. At the initial IPO, Strategy publicly issued 28,011,111 shares at $90 per share, and the company received net proceeds of about $2.47B in July 2025. This is the actual money the company received and can continue to use to buy BTC. Its notional amount is roughly: 28,011,111 × 100 (par value, no discount) = $2.8B. Usually, actual proceeds are less than notional but not by a large margin.

2. Post-IPO ATM shelf issuance status

1. July 29, 2025: STRC IPO completed, net proceeds about $2.47B. The company disclosed that this net amount was used to purchase 21,021 BTC.

2. July 31, 2025: STRC ATM registration became effective, registering a maximum of $4.2 billion in ATM (at-the-market) issuance capacity.

3. Q4 2025: STRC ATM began actual sales. As of February 1, 2026, the company disclosed that in Q4 2025, it sold 1,575,952 shares through STRC ATM, raising gross proceeds of about $157.6 million.

4. January 1 to February 1, 2026: Continued sales via STRC ATM, selling another 4,207,834 shares, raising about $421 million; as of February 1, 2026, remaining ATM capacity was about $3.6 billion.

5. February 2 to 8, 2026: No new sales.

6. February 9 to 16, 2026: Small sales. The February 17 8-K shows that in one week, STRC sold 785,354 shares, corresponding to a notional of $78.5 million and net proceeds of $78.4 million, leaving about $3.54 billion in capacity.

7. February 17 to 22, 2026: No new sales.

8. February 23 to March 1, 2026: Very small sales. In one week, STRC sold 71,590 shares, corresponding to a notional of $720,000 and net proceeds of $710,000, leaving about $3.54 billion.

9. March 2 to 8, 2026: Significant increase in sales. The March 9 8-K shows that in one week, STRC sold 3,776,205 shares, corresponding to a notional of $377.6 million and net proceeds of $377.1 million, leaving about $3.16 billion.

10. March 9 to 15, 2026: Large volume. The March 16 8-K shows that in one week, STRC sold 11,818,467 shares, corresponding to a notional of $1.1818 billion and net proceeds of $1.1804 billion, leaving about $1.9758 billion.

11. March 16 to 22, 2026: No new sales.

12. March 23, 2026: Termination of the old ATM; launch of a new $21 billion ATM; new sales agents.

Adding up the publicly disclosed phased data, STRC ATM has raised approximately $7.2M. That is, in notional terms: $7.1M (IPO) + $2.22B (ATM) ≈ $2.8B; in actual proceeds: $2.22B (IPO) + $5.03B (ATM) ≈ $4.7 billion.

3. Major holders

According to Bloomberg, the largest single holder of STRC is likely BlackRock’s PFF ETF, holding about 6% of STRC. Other major institutional holdings include:

1. FMR LLC, Fidelity Investments.

2. Capital Group Cos Inc., the largest active asset manager globally.

3. VanEck Associates Corp.

4. BioShares Biotechnology Funds, focused on biotech investments, managed by LifeSci Index Partners.

*Since holding reporting is not mandatory, only about 25% of positions are reported, which is normal.

III. Tax rules for non-U.S. residents purchasing STRC

1. About ROC (Return of Capital)

The STRC prospectus states that for non-U.S. holders, if distributions are treated as dividends, a 30% withholding tax generally applies, or a lower rate can be negotiated with tax treaties and W-8BEN.

Later, Strategy announced that in 2025, these distributions are 100% ROC under U.S. federal income tax, not dividends; IRS Topic 404 also clarifies that ROC is not a dividend but a return of part of your investment in the stock.

2. Capital gains tax basis offset

In theory, gains are not subject to withholding tax and are deferred as capital gains upon sale. According to the explanation, capital gains from selling STRC are generally not taxed in the U.S., unless they fall under effectively connected income, the 183-day rule (presence in the U.S. for 183 days or more in the tax year), or U.S. Real Property Interests (USRPI/USRPHC) exceptions.

Original text: generally will not be subject to U.S. federal income or withholding tax.

3. Example

Suppose you are a foreign investor, buy $1 million worth of STRC, and for three consecutive years, receive annual dividends at an 11.50% annualized rate, all treated as ROC under U.S. tax law. You earn $345k, so when you sell: buy $1 million of STRC, after 3 years of ROC, your tax basis drops to $655k, and selling at $1 million (assuming par value), you realize a capital gain of $345k. Under U.S. tax law, this results in a capital gain of $345,000.

The STRC prospectus states that gains from disposal by non-U.S. holders generally are not subject to U.S. federal income or withholding tax. Therefore, as a non-U.S. holder, you are unlikely to owe U.S. taxes on STRC.

IV. About dividend capacity and extreme liquidation

1. About the $2.25 billion USD reserve

Strategy disclosed on February 5, 2026, that it has established a $2.25 billion reserve, explicitly stating that this reserve can cover dividends and interest payments for over 2.5 years. This means, from the company’s perspective, this reserve is meant to buffer cash flows for interest and preferred stock dividends across the entire capital structure.

2. Interest payment pressure

Assuming STRC’s 11.50% rate and a scale of about $5 billion, the total annual cash burden for MicroStrategy’s preferred stock and debt is roughly $1 billion/year. The $2.25 billion reserve can cover about 2.3 years, already below the 2.5-year expectation.

If STRK is excluded (since STRK can be paid in stock), the total annual cash burden for preferred stock and debt is about $900 million/year, and the reserve can cover about 2.5 years.

This indicates that, under current static scale, the USD reserve provides about 2 years of cash buffer for MicroStrategy. However, the safety margin of the USD reserve is highly sensitive to the scale of STRC. As the scale of STRC continues to grow, the buffer will be diluted. At the current dividend level, when STRC reaches $10 billion, the reserve can only support about 1.5 years. This is a clear strategy of using interest payments to transition through a bear market.

3. Extreme liquidation pressure

1. Asset side: Simplified main assets

As of March 22, 2026, Strategy holds 762,099 BTC, with a total purchase cost of about $57.69 billion, averaging about $75,694 per BTC. The current BTC price is about $69,000, giving a market value of roughly $52.5 billion for this BTC. Assuming USD reserves are only $2 billion, the main asset total is about $54.5 billion.

2. Liquidation hierarchy and repayment

In liquidation order, debts and STRF are ahead of STRC.

As of March 19, 2026, STRC has 50,246,513 shares outstanding, at $100 stated amount, roughly $2.47B principal. On the same day, STRF has 12,839,689 shares outstanding; the company also disclosed that as of December 31, 2025, the total consolidated debt was about $8.25 billion.

Using only the disclosed amounts and the liquidation hierarchy, the hard liquidation scale ahead of STRC is approximately: $8.25 billion debt + $2.22B STRF = $345k. The remaining pool for STRC and below is roughly $54.5 billion - $655k = $345k. This provides about 9 times coverage for the $2.25B STRC.

To fully cover liquidation, BTC would need to be around $17,000. Based on the latest data, the current liquidation buffer for STRC remains quite substantial.

V. My view

Putting everything together, the essence of STRC is clear. It is not a bond, not principal-protected wealth management, not a deposit, nor a Bitcoin-collateralized debt position. It is a:

• Perpetual;

• Floating-rate;

• Cumulative dividend;

• Preferred stock at the Strategy parent company level.

Its appeal lies in:

• High current dividend rate;

• Liquidity has been created;

• Priority over common stock;

• Indirectly benefiting from the Strategy/BTC capital structure narrative.

Its problems are equally obvious:

• No unconditional principal guarantee;

• Dividends are not a fixed guarantee;

• High yield is not from the underlying assets’ natural income but a market premium for company credit and structural risk;

• It also has an issuance expansion switch, which has already been turned on.

This ticket currently looks relatively stable, with a thick liquidation cushion. If you hold it for 1-2 years, it is a qualified target. Its real risk is not today but whether this system can continue to be supported, whether the $100 anchor can be maintained, and how long the $2.25 billion reserve can sustain as the STRC scale keeps expanding.