Video Description

In this video, I discuss the changes that are making it easier for US corporations to hold Bitcoin on their balance sheets.

Bitcoin now has regulatory clarity as a digital commodity, so it doesn't count towards the 40% of assets upper limit that was set by the Investment Company Act of 1940.

Additionally, FASB has adopted fair value accounting rules for Bitcoin that will be used by all US companies, beginning in early 2025.

The last remaining piece of the puzzle is allowing large US banks to custody Bitcoin. When that piece is in place, the corporate arms race to accumulate Bitcoin will commence with full force.

Bitcoin is a much better store of value for corporate balance sheets than US government bonds, which lose purchasing power every year.

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121 sats \ 6 replies \ @grayruby 14 Aug

Agree. I don't think people are not paying enough attention to this. We are already seeing some smaller companies allocate. Miners are issuing debt and shares to buy more bitcoin to hold. Everyone is so focused on economic data and the election and the movements of MT Gox coins and US gov coins. It's all important in the short term but the long term trend is clear.

152 sats \ 5 replies \ @Undisciplined OP 14 Aug

I know I hadn't been thinking about this point. If it's such a problem for companies, though, why weren't they holding gold or other non-security assets?

I'm sure this will eventually be a big deal, but I'm not sure it's top of mind for most businesses.

67 sats \ 1 reply \ @jeff 15 Aug

Most companies are focused on turning cash into earnings via production and risk not hoarding currencies (of any kind). The ones that buy government bonds are doing so mostly with short-term maturities for liability-matching purposes. That is, they have to buy something in 45 days, so they buy 44 days of commercial paper, to make a few basis points between now and then.

0 sats \ 0 replies \ @Undisciplined OP 15 Aug

It makes more sense to me that businesses will start holding bitcoin when they actually need it for transactions, which won't happen until we're quite a bit further down the adoption curve.

26 sats \ 2 replies \ @grayruby 14 Aug

Well many companies hold real estate and other non security assets but not many hold gold probably because it is a pain in the ass to hold.

51 sats \ 1 reply \ @Undisciplined OP 14 Aug

That's true. Presumably, they could hold gold certificates, though.

I'm wondering if they aren't just thinking about the problem differently. They have a bunch of idle dollars and might be looking for a return on them, more so than a store of value.

That wouldn't keep them out of Bitcoin, but it's a little different than Krattert was framing it.

37 sats \ 0 replies \ @grayruby 14 Aug

Yes.