A growing number of companies across the planet are using digital assets like bitcoin for a range of transactional, operational, and investment purposes. More than 2,300 United States based businesses accept bitcoin as per an estimate from late 2020, and that does not include bitcoin ATMs. Asper Kavan Choksi the use of crypto for conducting business presents a range of challenges and opportunities. As with any frontier, there are both strong incentives and unknown dangers related to it.
Kavan Choksi talks about the use of cryptocurrency in business
Cryptocurrency can help businesses to gain access to new demographic groups. Users of such digital assets often represent a more cutting edge clientele who value a high degree of transparency in their transactions. Moreover, the use of crypto can also help spur internal awareness in a company about this new technology. It may also help position the business in a crucial important emerging space for a future that might include central bank digital currencies. Crypto can enable access to new liquidity pools and capital through traditional investments that have been tokenized, along with new asset classes. Crypto furnishes specific options that are not available with fiat currency. For instance, programmable money can allow accurate and real-time revenue sharing while enhancing transparency to facilitate back-office reconciliation.
There are certain companies that use crypto simply to facilitate payments. One avenue to do so is to just convert in and out of crypto to fiat currency for receiving or making payments without actually touching it. In other words, these companies take a “hands-off” approach that keeps crypto off the books. Enabling crypto payments without bringing it onto the balance sheet of the company is likely to be the fastest and easiest entry point into the use of digital assets. It may require making very few adjustments across the spectrum of corporate functions and cater to immediate goals like growing the volume of each sales transaction and reaching a new clientele. Companies that adopt such a limited use of crypto ideally depend on third-party vendors. These third party vendors act as an agent for the company, and accept or make payments in crypto through conversion into and out of fiat currency. This usually is the simplest option to pursue. In all likelihood, doing so might cause relatively fewer disruptions to the international functions of a company as the “hands-off” approach keeps crypto off the corporate balance sheet.
In case a company is ready to go beyond just enabling crypto payments and intends to broaden crypto adoption with the treasury function and operations, or in other words, go with a “hands-on” route, then it might potentially be able to explore a range of advantages. It also shall have several technical matters to address in this situation. Kavan Choksi mentions that there are two paths a company can follow when embarking on a broader “hands-on” adoption of crypto. It can either use a custodian or third-party vendor to maintain custody of the crypto on a blockchain and of wallet management services that facilitate the tracking and valuation of the crypto assets. Or, it can integrate crypto into the own systems of the company and manage its private keys.