Why More Corporates Are Considering Adding Crypto Assets to Their Corporate Treasuries

14 October 2021

in Market

Reading Time: 3 mins read

More and more businesses are including cryptocurrencies as part of their corporate treasuries. The trend that was started by large publicly traded companies in 2020 is rising.

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But as you’re about to find out, companies like BVNK are helping the middle market do the same thing – whether that be midsize to large corporations, family offices or tech-savvy high-net-worth (HNW) individuals operating with $100,000 to $500,000 to invest.

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The Beginning of Corporate Crypto Treasuries

On Aug. 11, 2020, business intelligence firm MicroStrategy became the first publicly traded company to buy bitcoin. Today, the company owns nearly 109,000 bitcoins, representing 75% of the reserves on its balance sheet.

While MicroStrategy and other publicly traded companies like Tesla and Square, and countries like El Salvador have “adopted” bitcoin, large capital investments in cryptocurrency aren’t limited to just Fortune 500 companies and developing nations. Many other enterprise-level companies are getting in on the act too.

Did you know, for example, that Ikea Group, the company that makes furniture you can put together yourself, is also investing in cryptocurrencies? So is the Association of Corporate Treasurers.

Geely Auto Group, the largest shareholder in the Volvo automotive brand, is also getting in the game with a vision for incorporating decentralized applications into vehicles throughout China in the future, while also adding crypto to its treasury.

The Present and Future of Corporate Crypto Treasuries

In a recent study, Fidelity Digital Assets discovered seven out of every 10 institutional investors surveyed plan to invest in digital assets in the next five years. The study also confirms that 52% of companies surveyed in Europe, Asia, and the United States currently invest in digital assets. Enterprises will undoubtedly follow suit, and thus will have to keep digital assets in their reserves if they plan to serve customers on a day-to-day basis using cryptocurrency.

In another study, the European Commission estimates that enterprise-level businesses on the continent can close a €25-€30 billion gap in financing with digital assets.

Family offices are also getting in on the act. Goldman Sachs estimates that 15% of family offices around the world own cryptocurrency assets. That includes 25% of family offices located in the Americas.

Just under 10% of survey respondents in Europe, Africa, and Asia own digital assets, but it’s expected that those numbers will grow rapidly in the coming years.

Overall, 42% of respondents to the survey say that they are already investing in digital assets and that investing in precious metals comes a close second.

Why It’s a Good Idea to Have Crypto Assets in a Corporate Treasury

The same study referenced above points out that respondents are using crypto assets, precious metals and traditional currencies as a way to diversify investments geographically and protect capital from potential currency debasement in the future.

Hedging against debasement and inflation is one reason it’s a great idea to have crypto assets as part of a corporate treasury. Even if large-scale debasement of currencies doesn’t happen for decades, enterprises of all sizes can still benefit from a first-mover advantage. Even 13 years after the inception of bitcoin, the crypto asset class is still maturing.

Beyond benefiting from the price appreciation of the crypto assets themselves, organizations will also benefit from the fact that 40% of crypto-savvy customers spend at least double the amount that a crypto customer spends using a traditional credit card.

Crypto assets and the blockchains they live on also enable transparency, revenue-sharing activities and money transfers to take place in real time. They offer more control over capital and allow companies to manage the risks associated with digital investments, too.

With so many practical and financial benefits associated with adding cryptocurrencies to corporate treasures, it’s easy to see why 40% of small and midsized corporations already accept cryptocurrency as payment.

How BVNK Can Help Businesses Establish Crypto Asset Treasuries

BVNK is a turnkey, digital asset banking platform that can help businesses establish corporate treasuries and accept payments from customers. Diversifying global banking services and treasury suppliers is one of the biggest challenges the mid-market is facing. Particularly when it comes to making payments to crypto businesses.

The above research highlights the crypto asset corporate treasury trend that’s already taking many recognizable global brands by storm. As time goes on, more and more businesses are going to jump on board with the idea of building treasuries – and organizations like BVNK are going to make a big impact in helping them do just that.

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