The COVID-19 pandemic and its accompanying monetary policy have caused a surge in demand for bitcoin, and now companies are eying “digital gold” to protect their treasuries from cash depreciation.
Announced Monday, bitcoin financial services firm Unchained Capital has released an “advanced business account” specifically targeting firms that not only want to hold bitcoin but want to handle their own private keys rather than rely on some third-party crypto custodian (in keeping with the ethos of “not your keys, not your bitcoin”).
The impetus to launch this service is straightforward and simple: It is no longer just folks in the crypto sphere who are worried about the printing of money, negative interest rates and the like. Just look at MicroStrategy’s recent moves.
Michael Saylor, founder of the business intelligence company, described bitcoin as “superior to cash” and announced that his publicly traded firm had purchased an additional $175 million of it last week, upping MicroStrategy’s total BTC holdings to around $425 million.
MicroStrategy is blazing a trail that many others are now in line to follow, explained Parker Lewis, head of business development at Unchained Capital.
As well as crypto-native businesses, family offices and investment firms, there is also an emergent crop of interested businesses that are not Bitcoin-centric, Lewis said.
“We have companies that you wouldn’t expect, like your local bakery or your local liquor store that hold bitcoin in treasury,” Lewis told CoinDesk. “They are not Bitcoin-centric businesses, but they hold bitcoin and they hold their own keys; both small and large, like the MicroStrategies of this world.”
As for Saylor, he told CoinDesk the numbers tell the tale.
“This year, the real yield on treasury assets dived to something like -20%. We can expect these assets to yield -10% or less for the years to come,” he said via Twitter DMs. “Corporate treasurers need to keep a reasonably liquid, elastic asset on the balance sheet to ensure the company can meet its obligations to employees, customers, vendors, creditors, etc. Bitcoin is the only asset that meets those requirements that also has a positive real yield.”
In times past it would have been hard to imagine the CEO or chief financial officer of a company wanting to mess around with private keys.
“We make it really simple,” said Phil Geiger, Unchained’s head of marketing. “We hold one key, our clients hold two keys, which means that our clients are really in full control over their bitcoin. With these new business accounts, we have built out a combination of enterprise-level controls for different user types, accounting and so on. But at the base of everything, it’s the Bitcoin protocol.”
This is all fine and dandy, but regulated financial firms see a gray area at best when it comes to crypto custody, and are likely to lean towards the closest thing to the traditional world, a regulated custodian such as BitGo Trust.
“At first blush, that’s entirely logical,” said Lewis. “But I think there will be this push and pull in terms of the way things were, and how they are shifting over to the way things will be. We have this new form of money; do we need to forfeit it to legacy regulation that has existed for 30 or 40 years? Maybe the reality is that the regulations need to change to deliver the best security.”
So if a CFO needs to quickly get their hands on fiat how does that typically work?
“I think this can be tailored to the size of the organization,” said Lewis. “We have relationships with five or six OTC desks as well as being able to trade on exchange.”
Aleksandar Svetski, co-founder of bitcoin savings app Amber, has held 50% of the firm’s treasury in bitcoin for the past year. He pointed to abject conditions around cash and interest rates as a compelling incentive.
“Look at things like negative interest rates,” said Svetski. “What the fuck kind of ‘Twilight Zone’ world do we live in where you now have to pay a bank to hold your money? Of course people are looking for a non-cash alternative. Anyone who isn’t thinking about holding bitcoin now is crazy.”