I just publicly asked our CFO whether he's considered allocating some of our company treasury to Bitcoin. I referenced counterparty risk related to banking liquidity and potential bank bail-ins.
He's very aware of the SVB issues and has already had to take some actions with regards to that.
However, the company I work at is generally quite normie with regards to finance, and I've already got a lot of 😅 reactions mocking my question.
I don't want to be overly confrontational, since this is where I work. I also don't expect the CFO to respond enthusiastically, or at all. But, I'd like to post something simple and clear that some may read and at least consider.
I tried to find some things from NYDIG, Fidelity and Unchained but none quite hit the mark. I already shared bitcointreasuries.net.
Will give bounty to best single article / report shared, and send some sats to others. Thanks for the help!
About a year ago my former biz partner and I wound down our crypto treasury startup to bring cryptocurrency to corporate balance sheets, with Bitcoin being the biggest selling point and driver. The biggest problem remains to be the accounting.
Bitcoin is still considered to be intangible asset by the GAAP accounting rules. This flies in the face of all former mentions by Fed officials of Bitcoin being considered as a commodity, and therefore as a separate asset from token based crypto in the eth world, or stablecoins - which we treated effectively as an unregulated derivative.
When you're a public company and hold an amount of intangible assets that is material - you must regularly test the asset for something called impairment. Here's how it works: say you're a CFO and you buy $20 million BTC at 15k for a rainy future bank-run day. A month goes by and the price falls to 13k - now that asset is considered to be impaired, and you now only have 13k btc on your balance sheet. Another month goes by and next quarter comes - time to report to the markets. Lo and behold, BTC has in fact gone back up to 17k ... but since the asset is impaired, you have to report it to your investors at 13k!!!
That means that while spot market value on exchanges has your bags sitting around 22.7 million, you have to report 17.3 million and a loss of book value of 2.7 million in assets.
The real kicker is that these rules are different for hedge funds, banks, and securities brokers, who have different accounting rules since they're financial firms. This is also why there was and still is such a big pressure to issue a Bitcoin based ETF on Wall Street to serve as a Fortune 500 friendly vehicle.
How do you sell it to CFOs? If I knew that, I'd still have my startup.
Hasn't this changed October last year? Michael Saylor also mentioned this problem.
But seems like the FASB pivoted and decided that fair-value accounting for crypto assets should be used: https://www.coindesk.com/business/2022/10/13/fasb-mulls-fair-value-accounting-for-crypto-holdings-report/
Looks like they still need to officially update the accounting standards, but that this is definitely the direction of travel.
This is from this page dated 8 Feb 2023: https://www.fasb.org/Page/ProjectPage?metadata=fasb-Accounting-for-and-Disclosure-of-Crypto-Assets
Thanks for this response. What are you working on now?
I decided to give you the bounty. Tbh, none of the replies to this post met the criteria I set for the bounty, so I gave the bounty to you because I learned something and appreciated how honest it was.
@gunson, thank you, that was very gracious and unexpected. Truth be told, I've been a bit rudderless since we closed up shop.
We had pivoted over to a Web3 wallet but didn't find much success. To better align with my background in B2C and consumer Internet, I've moved my projects over to be almost entirely focused on media now and back to being exclusively focused on Bitcoin. In fact I've been working solo and in isolation for the past year, and my hope is to make an ANN here on stacker.news in the not too distant future to get feedback.
In keeping with your request for an actual article, I can share a white paper I co-wrote with my previous business partner. We managed to get featured on TMI and they hosted us in their solutions catalog. The company has since been dissolved, but I think a lot of the ideas and intent in that doc are still accurate and directionally correct. There was, at the time, an enormous pressure for custody based solutions for corporate treasury due to regulatory concerns, and we were trying to reconcile that with the writing on the wall that self-custody based products was going to be the only end-game worth pursuing. As the common refrain goes - we were too early.
Ask M. Saylor how he did it for Microstrategy 😂😂
I did the same, like you, but back in 2016-2017, with some of my clients. I was working like a freelancer in IT consulting and I wanted my clients to pay me in BTC directly. But none of them accept BTC in their business. So I went on convincing them to start buying BTC as company funds reserve, for long term. And from that fund, they could pay my invoices.
Some they start doing this as a fun experiment, with small amounts and increasing over time. Some they didn't want it and I didn't insist anymore (HFSP). But those that listened my advice, later they were very grateful to me. And I also start giving them free BTC classes and support, how to use it, how to store it, secure it, multisig for directors, finance dep etc. Some of these companies I know for a fact they accumulated even way before M.Saylor a very good amount of BTC and they still keep it as funds reserves.
And from 2018 they start paying me in BTC. No more fiat. So I will 100% agree with your proposal to convince them to buy BTC as company reserves. It worth it.
Here you have also a very interesting case by somebody explaining step by step how to buy BTC with loans. Maybe can inspire you more.
As Darth points out, Michael Saylor came to Bitcoin from a corporate my-treasury-is-melting-away perspective. His whole point of view (which is explained in many podcasts and interviews) should appeal very strongly to a corporate CFO. I don't think you will find something better than that, and if your CFO is smart enough, he will understand it pretty fast. You can look around to pick what interview you like the most and send it to your CFO.
The financial performance of Microstrategy since Saylor took that decision should also entice your CFO quite a bit.
Yes, I am sure there's a good material on his hope.com page about this. That should be first go. I remember also he had an online course session for corporations exactly about this, but can't find now the video.
I was looking at hope.com, and while I've got nothing against Saylor it does come across as a very Saylor-centric / promoting site.
Also, I know that videos and podcasts won't be viewed as much. Looking for a credible looking article or report.
If your idea of credibility means big names of corporations, universities, think tanks and governments who depend on fiat to survive, I think you are looking for Bitcoin articles on the wrong place mate.
Parker Lewis, Bitcoin is the Great Definancialization https://unchained.com/blog/bitcoin-is-the-great-definancialization/
Longer read, but pretty darn compelling and doesn't sound like a sales pitch.
If you work for a public company, holding Bitcoin on your balance sheet could and would most likely attract new / incremental buyers of your company’s stock. Most money managers have specific investment mandates spelled out which preclude them from holding Bitcoin directly, meaning they are only allowed to invest in public companies, in specific industries, or in companies of a specific size, etc. There are plenty of money managers who would like to have exposure to Bitcoin but don’t have many ways of doing so. If your CFO held some on your company’s balance sheet, these money managers could buy your company’s shares in the public market and gain exposure to Bitcoin that way.
Rome Portugal Spain Germany USA...
A BTC-backed stablecoin such as DOC or ZUSD would be a better fit for this use-case than BTC, unless the company plans on holding the BTC for many years without needing to sell in the interim (since BTC is likely to decrease in value during that time period, which would result in realized losses -- some businesses could afford to eat those losses, but many could not). Alternatively, the company could buy BTC and offset any losses with derivatives, although imo this has more counterparty risk than the BTC-backed stablecoins would have.
Back to the basics, it should be all he needs to read to take his own conclusion: https://www.lynalden.com/what-is-money/
Someone just smugly replied "have you heard of FTX? :) "
This is the level of sophistication I'm targeting. Obviously I just politely suggested that we self or collaborative custody, and don't use a fraudulent exchange since the problem I originally pointed out was counterparty risk.
Someone else just responded that there's no risk because the Fed won't let banks go bust :)
Trying to fight back against this level of "normie" is a battle of futility. Just sit back and say "I told you so" when it all comes crashing down.
deleted by author