Reporting on finance offers an exciting journey filled with diverse areas to explore. Recently, delving into the processes of stock “uplisting” and corporate treasury management has uncovered intriguing insights. Contrary to merely handling cash and payments, treasury management involves strategic decisions to optimize cash through various investments. Companies akin to Fortune 500 often have dedicated teams solely focused on this aspect. Now, the spotlight shifts to Bitcoin.
Presently, only a few companies intertwine Bitcoin with their corporate treasuries, alongside conventional investments like T-bills and foreign exchange. A significant deterrent is how accounting treats crypto: losses can be recorded, but not gains. For instance, if a firm buys Bitcoin at $20,000, drops to $15,000, and even surges to $50,000 later, the initial impairment stays, causing both PR and financial complications.
However, a game-changer looms. Accounting standard setters recently revised rules for crypto. As of next December, firms can recognize Bitcoin gains on their balance sheets. If crypto prices persist, this amendment could result in considerable gains for companies like Tesla and Square. The big question is whether other major players, especially from finance or tech sectors, will follow suit and include crypto in their treasuries.
Optimism exists, yet skepticism prevails. Despite accounting concerns resolving, Bitcoin’s extreme volatility could deter many CEOs from taking the plunge. Only founders with substantial shares, like Elon Musk and Jack Dorsey, tend to take unconventional paths with Bitcoin, as seen in Tesla and Block’s strategies.
The enthusiasm of Michael Saylor, MicroStrategy’s CEO, regarding the new accounting rules, seems overly positive. While his vision of Bitcoin as a global treasury reserve asset is ambitious, it’s difficult to fully share the same enthusiasm. However, accountant Lavash suggests the rise of more executives open to adding Bitcoin to treasuries is plausible. Even a 5% increase in big companies embracing Bitcoin could significantly validate crypto. Time will reveal the impact of these shifts in the next year.
