Corporate treasurers are the custodians of their companies’ balance sheets. They do this in several ways: by hedging risks, by matching assets to liabilities, by monitoring liquidity and cash flows and ultimately by generating a return from the cash sitting on their balance sheet.
In the last few years, this last task has become both more important and more difficult. The pandemic has put a primacy on yields, but at the same time, colossal central interventions have suppressed the yields that are on offer. Returns from bank accounts, money market funds and overnight repo markets – the traditional ways that corporate treasurers have found yield – are close to or at zero. When taking rising inflation into account, the returns are largely negative.
It’s unsurprising, then, that a growing cohort of companies is looking to incorporate crypto currencies into their corporate treasuries. This is not only to match any current or future liabilities in the same currency, but also to harness the highly attractive yields that crypto markets can offer in comparison to traditional markets.
Deloitte recently noted that more than 2,300 U.S. companies accepted crypto. Reports show that this includes Microsoft, Wikipedia, PayPal, Starbucks, AT&T, Overstock, Twitch and Amazon. Any company that accepts crypto as a form of payment must also decide where and how to make the most of the yield opportunities that come with it.
A time for yield
The growth of the cryptocurrency market to over $2 trillion has led to a significant increase in demand for short-term borrowing to fund trading operations or short-term treasury requirements. This imbalance is one of the reasons why BCB Group decided to launch BCB Yield.
BCB Yield offers different ways for customers to earn a return through BCB Group Securities. This fund allows customers to invest a range of currencies for a fixed period to accrue yield in fiat and/or crypto, with a minimum term of 30 days. Customers are issued a 30-, 60- or 90-day note, which works in a similar way to a bond, generating a return much greater than those in traditional finance.
The BCB Group Securities is a securitization fund governed by the Luxembourg Securitization Law that provides multiple strategies for EUR, GBP, USD and CHF. The returns it generates are not just a product of the demand for short-term crypto lending. Indeed, crypto differs from fiat money by its innate ability to generate returns from other activities, including mining, farming and staking, over and above the short-term exigencies of market supply and demand.
The BCB Group Securities is the first of a range of yield products that BCB Group will launch this year, including products that use selected DeFi protocols and products that connect traditional finance with the world of crypto. BCB Yield is now open to eligible institutional investors who wish to significantly outperform traditional markets by accessing the digital lending markets. BCB Yield is not available to retail investors or to investors who are unable to invest due to restrictions on sale and distribution in the jurisdiction in which they operate or reside.
“BCB customers can now access a brand-new set of features designed to earn a return on their balance while offering a genuine alternative to low-yielding traditional finance vehicles,” said BCB Group Founder and CEO Oliver von Landsberg-Sadie. “The crypto markets are generating phenomenal innovation and as a multi-regulated institution, serving both the traditional finance and crypto industry, we are uniquely positioned to leverage both markets to generate sustainable market risk-neutral returns.”
The development of yield products aimed at corporate treasurers is the next step in the development of crypto in parallel with traditional financial markets. Crypto is already known to be a hedge against inflation and is a proven means of exchange. Now treasurers can use crypto yield products to generate the returns that are largely absent from the traditional markets today.
THE NOTES REFERRED TO IN THIS ARTICLE ARE NOT INTENDED TO BE, AND ARE NOT BEING, OFFERED OR SOLD TO RETAIL INVESTORS IN THE UNITED KINGDOM OR THE EUROPEAN ECONOMIC AREA OR TO INVESTORS IN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS OR IN ANY OTHER JURISDICTION WHERE TO DO SO WOULD NOT BE LAWFUL.
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