As the interest in bitcoin (BTC) as a treasury asset is seemingly growing among companies, new initiatives that help business people better understand this investment and related risks emerge.
While one of the most active BTC promoters, US-based software company MicroStrategy, plans to host over 1,400 firms at their online Bitcoin for Corporations event today and tomorrow, major consultancy company Deloitte released a guide for corporations willing to invest in this most popular cryptocurrency.
The paper also builds on MicroStrategy's own experiences with allocating the company’s funds to BTC. As reported yesterday, the company spent another USD 10m on BTC and now holds BTC 71,079, acquired for USD 1.145bn at an average price of USD 16,109 per BTC. This stash today is worth more than USD 2.55bn.
“In 2020, more operating companies began allocating cash to digital assets and cryptocurrencies. This is a new dynamic and a departure from more conventional investing by funds and others in this space,” according to Deloitte.
The guide explores a number of topics such as cryptocurrency treasury and investment strategies, integrating bitcoin into companies’ balance sheets, legal and regulatory considerations of crypto investments, as well as the accountancy, tax, and audit aspects of such transactions, among others.
"Before proceeding, we want to make one point absolutely clear: There is no playbook or foolproof approach for these kinds of bold moves. There is only painstaking effort, disciplined analysis, fresh thinking and rethinking, dedicated collaboration across competencies, and, above all, rigorous execution," Deloitte stressed.
However, the paper’s authors suggest that any company determined to invest its assets in crypto must undergo a realignment in thinking, but also in the functioning of its respective organizational branches.
“Typically, the various functions and departments of a company establish procedures and assumptions for collaborating across and outside the organization based on normal-course, well-understood transactions,” the report said. “The terrain of digital assets is a new frontier of possibilities, so it requires that each corporate department, and its external party, rethink the application of the rules and policies of its core competency.”
According to them, few of the norms associated with legacy investments in securities, fiat currency, or treasuries may apply.
"Once each group gains a level of comfort with the application of the rules to digital assets, they then need to actively listen to one another, gain an understanding of the sensitivities, evaluate any operational or technical dependencies, and finally rethink how they collaborate and tackle challenges together,” the guide said.
Other necessary adjustments include putting the right risk measures in place, paired with the right risk tolerance levels due to the high price volatility of crypto assets. However, these challenges are “navigable with the right level of commitment from all departments and external parties,” the paper concluded.
"Global macroeconomic, monetary, and digital evolutions have converged, requiring all forward-thinking corporations to consider alternative assets on their balance sheet. The ecosystem and the regulatory environment for digital assets, especially Bitcoin, have matured to the point that this strategy is becoming approachable and mainstream," Phong Le, President and Chief Financial Officer of MicroStrategy, is quoted as saying in the guide.
Meanwhile, today, Michael Saylor, CEO and Chairman of MicroStrategy, will be once again promoting BTC as a safe haven for corporate investments, and an asset that could replace more traditional stores of value such as gold. He'll talk about BTC macro and corporate strategies, while other team members will present BTC corporate playbook, legal and finance considerations.
Also, in a recent exchange on Twitter with Steve Forbes, Chairman and Editor-in-Chief of Forbes Magazine, Saylor advocated for bitcoin, saying it was “not a currency and it is not replacing the dollar. It is a monetary asset rapidly replacing gold as a store of value. It will coexist with fiat currencies as it attracts capital from weaker safe haven assets.”
However, Changpeng Zhao, CEO of major crypto exchange Binance, is of different opinion:
@michael_saylor @SteveForbesCEO Many people get this wrong. They are all either afraid of (or hoping) #bitcoin will… https://t.co/MUm7zphkJ1— CZ ?? BINANCE (@cz_binance)
At the time of writing (11:21 UTC), BTC trades at USD 36,064 and is up by 2.4% in a day, and almost 11% in a week. The price is up by 9% in a month and 286% in a year.