Green-friendly corporate treasurers flocking to Bitcoin
Nickel Digital Asset Management is set to launch an environmentally friendly Bitcoin fund aimed at encouraging more corporate interest in crypto assets.
Anatoly Chrachilov, co-founder of the investment firm whose products include Bitcoin tracker fund Digital Gold Institutional, said the fund should go live as a public listed vehicle in the next two to three months. He said it would remove another ‘deal-breaking’ barrier to greater treasury adoption of digital assets.
“We are increasingly speaking to insurance companies, private banks and corporate treasurers about adding the value of Bitcoin to their investments or treasury stock,” says Chrachilov. “One deal breaker has been ESG. They can find an argument for S and for G, but not for E given the large energy consumption of Bitcoin mining.”
His new fund aims to comprise the 39 percent of Bitcoin miners – not those digging into the ground for metal but using computers to verify and record transactions – which exclusively use renewable energy.
“It could open a floodgate bringing in billions of dollars into digital assets,” he said. “We have spoken to a couple of corporate treasurers who are in the early stage of looking at digital assets. Bitcoin can be complementary to a traditional treasury stockpile of dollars or euros either bought directly and held on the balance sheet or via a fund.”
His comments follow those of Anthony Scaramucci of SkyBridge Capital who last month filed to the Securities and Exchange Commission for the First Trust SkyBridge Bitcoin ETF Trust. “A responsible treasurer will have to think about other assets to hold as a potential store of value for their companies,” he told CoinDesk TV. “A flood of US stimulus money is a silent tax on US savers.”
Indeed, corporate interest has been pricked by the price of Bitcoin soaring from $6,850 on April 3, according to CoinDesk, to nearly $60,000 today and the chase for income and yield in a low interest rate environment.
Electric car maker Tesla has bought $1.5bn of the currency and allowed customers to purchase vehicles using it.
Ralph Payne, chief financial officer of digital asset infrastructure provider Copper, believes 20 percent of globally listed firms will ‘be involved in digital assets in some form’ in the next five years.
“We will start seeing annual reports of listed companies mentioning they have digital asset holdings,” he says. “It will be for price exposure reasons through a fund or to collect yield but primarily to offer a crypto payment rail to offer customers greater choice.”
That’s both for B2C and B2B customers.
“There are many international businesses selling products and services into emerging markets dealing with local currency depreciations and expensive banking infrastructure,” says Luke Sully, chief executive of digital treasury manager Ledgermatic. “That will increase post-Covid. With Bitcoin and digital assets in general you can diversify your payment corridors with international partners and reduce this exposure.”
It is the way business is evolving he argues.
“Over the next two to three years a G20 country will launch their own central bank digital currency,” he says. “Money is software not paper anymore. Treasurers can elevate their own reputations within organisations by understanding this and becoming more strategic in how they hold and deploy capital.”
Copper is currently talking to 15 corporate treasurers of listed companies about Bitcoin as an asset class. “That’s 15 more than this time last year,” Payne says. “Corporate treasurers are not savvy about crypto and need to learn how liquid the market is. They are risk averse by nature and won’t be desperately throwing money at it on a whim. As we go forward, we will have several clients live and trading with us. But it won’t be universal because the aim of a treasury is not to be a profit centre and to capture as much yield as possible.”
Indeed, concerns around Bitcoin remain. “It is questionable whether the characteristics of Bitcoin make it truly compatible with existing currencies in terms of portability, divisibility, resilience to counterfeiting, stability and general public acceptance,” says Dee Singh Kothari, treasury consultant.
Chrachilov admits that Bitcoin does have large upside swings followed by corrections, but this is normal for new technologies. When talking to asset managers he advises they only hold up to three percent of of Bitcoin in their portfolios.
“Treasurers should not ignore Bitcoin. At the very least they should have a well-informed view on it,” he says.