Cryptocurrencies: Considerations for Treasuries

Cryptocurrencies: Considerations for Treasuries This year alone the crypto world has had its share of make-or-break events, from a direct listing by one of the biggest exchanges to large-scale institutional investments and massive price rallies for meme-based cryptocurrencies. This activity has piqued the interest of corporate treasurers. Organizations, have expressed interest in cryptocurrency initially as a fringe method of collection, a potential experiment for their foundations and even as an outlet for excess cash. However, many treasurers today are not sure of what questions to ask to initially frame the relevance, opportunity and risks associated for their company. Since the publication of the Bitcoin whitepaper 13 years ago, cryptocurrencies have evolved from being an obscure internet novelty to reaching a two trillion dollar market cap. Whether or not cryptocurrency disrupts the payment system as we know it, it has sparked new thinking in payment infrastructure, processing, an accounting, in addition to its increasing adoption as a store of value. Much debate has transpired over the ultimate value of cryptocurrencies, but as interest expands to corporations and other large institutions, and the ecosystem of wallet providers and other service providers grows, treasurers have much to consider. Crypto players have likely eagerly watched the rapid expansion and growth of peer-to-peer wallet transactions which might be a future indicator for their own adoption. Regardless of outcome, treasuries are presented with the same questions as with any other financial asset they choose to receive: How will these assets be integrated into treasury management practices and policies? What accounting rules apply? What new risks need to be managed? This paper explores some emerging considerations for treasuries eager to better learn and understand cryptocurrencies and the required considerations, risks and benefits to potential adoption. We focus exclusively on cryptocurrencies like bitcoin, intangible digital assets that today are not being used as a mainstream medium of exchange, but theorectically could be in the future. These are traded either peer-to-peer or on exchanges. While stablecoins and central bank digital currencies (CBDCs) are often eagerly lumped together as “cryptocurrencies,” we do not cover these or other types of digital assets in this report. Instead, we focus explicitly on cryptocurrencies as defined above, using this term interchangeably with the abbreviated “crypto.” Treasury and Trade Solutions William Artingstall Emerging Payments and Business Development Director