Crunch time: The CFO’s guide to cryptocurrency

A vital characteristic of the financial sector is the ongoing evolution, which occurs at every level and corner of the planet. Groundbreaking technologies and innovative business models are among the most significant disruptive forces, bringing about seemingly endless possibilities. The emergence of crypto assets represents one of the latest developments. Cryptocurrency holdings and transaction volumes have grown swiftly worldwide, driven chiefly by long-term inflation expectations. The volumes tend to be higher in countries with higher information and communications technology penetration. Finance leaders are becoming more confident in cryptocurrency, with several factors fueling this growth of optimism, such as tokenization and its potential to support global innovation.  

Due to its elaborate functionality, lower marketplace take rates, and inclusive ethos and culture, Ethereum has positioned itself as one of the most likely long-term disruptors. Maybe the easiest and most popular way to buy Ethereum is through a cryptocurrency exchange like Binance. It can be used to send simple payments, but Ethereum is designed to be more than a payment system. It features a globally distributed infrastructure, smart contract capabilities, and decentralized applications. While it’s certainly not a panacea to overcome the challenges in the world of finance, crypto assets and the underlying blockchain technology do hold a promise for enterprises.  

Here’s a quick reference guide to cryptocurrency. 

The Cryptocurrency Market Is Now Worth Around $2 Trillion 

According to the Wall Street Journal, the global cryptocurrency market size is valued at approximately $2 trillion. The cumulative market cap of cryptocurrencies increased in early 2023 following a downfall in November 2022, with Bitcoin’s market cap representing the majority of the overall market capitalization. Cryptocurrencies are basically exceeding dollars in circulation, but they’re not worth more than all the money out there. Individuals from countries like Africa, Asia, and South America are more likely to own crypto assets, using cryptocurrency to pay for goods or services or send money to family and friends. Professional investors seeking cryptocurrency-based ETFs mostly come from Europe rather than the United States or China. 

The Once Clear Boundaries Between Traditional Finance and Cryptocurrency Are Becoming Blurred 

Investors are more likely to commit themselves to traditional finance, provided it offers relevant services. Consequently, traditional finance services now exist for cryptocurrency, notably savings accounts, borrowing, lending, and asset management, to name a few. The reason why this matters is that it demonstrates the willingness of established institutions to change their perception of crypto assets, which could impact the industry’s trajectory. It appears as if the separation between the capital markets and cryptocurrency is not so clear-cut anymore. Cryptocurrency is becoming more interconnected with regulated markets, therefore, providing an incentive for regulators to take steps to preserve the integrity of the system and protect investors. 

Governments Are Increasingly Looking to Regulate Cryptocurrency 

Unlike investors, governments are suspicious of cryptocurrency, so they would like to restrict the industry’s rapid growth. The question now is, how can authorities regulate Bitcoin, Ethereum, and other cryptocurrencies? The main issue is that the supply of tokens isn’t set by administrative power. Equally, transactions using the blockchain can be managed, authenticated, and recorded on the public ledger without any interference. China has made an effort to close cryptocurrency exchanges and dismiss mining activities, yet it hasn’t had a considerable impact on the price of crypto assets. By and large, the current regulatory apparatus is unprepared to oversee the new financial technology. 

Small And Large Corporations Are Adopting Cryptocurrency 

Blockchain systems are receiving growing interest across major industries, of which mention can be made of banking and payments, supply chain management, cybersecurity, forecasting, insurance, and cloud storage. The explosion of interest in cryptocurrency has determined small and large corporations alike to use it as a payment on the subject of B2B customers, suppliers, employees, and even national governments. Unfortunately, there are challenges for mainstream adoption, such as constant price fluctuations and the lack of user-friendly wallets. It’s up to CFOs to manage the disruption to the current financial networks and business models. Cryptocurrency is growing into the Internet’s native monetary layer. 

Cryptocurrency Can Be Used in A Myriad of Innovative Ways 

Numerous cryptocurrency use cases stem from the evolution of today’s financial system. Here are a few ways cryptocurrency is being used in organizations, but make sure you understand the risks inherent to this asset class: 

  • Create value in business: Organizations must take steps to improve and enhance processes to support customer needs and create value for stakeholders. More and more companies worldwide are using cryptocurrency for a host of investment, operational, and transactional purposes. For example, It’s possible to raise funds by issuing tokens via an ICO public sale event. Nevertheless, it’s necessary to take into account management reporting. Conducting business in cryptocurrency entails some very challenging and unique tax and accounting requirements.  
  • Simplify the payment process: An optimized payment experience enhances the business’s bottom line and growth prospects. To start accepting cryptocurrency payments, it’s necessary to integrate with stablecoins and other virtual currencies. Additionally, it’s important to work with an existing payment processor, which eliminates the need for a cryptocurrency wallet. It removes much of the uncertainty, deception, and speculation that come from a decentralized source of value. 
  • Seize the power of leverage: Leverage is advantageous to organizations, as they can borrow capital to invest and expand their operations. Cryptocurrency can serve as collateral for borrowing, offering a guarantee that the loan will be repaid. Likewise, lending and liquidity provisioning can help generate passive income. It’s of the essence to work with companies that reconcile centralized and decentralized finance. 

Wrapping It Up 

All things considered, blockchain solutions can add value in financial organizations by digitizing manual processes and enabling more efficient information exchange. CFOs should develop a model based on assumptions that are reasonable and well-articulated to represent a fair forecast. With a model, it’s easier to develop a strategy that includes coherent actions. Organizations can use cryptocurrency as a stored value, a new type of payment, or collateral for leveraged investments. This list isn’t exhaustive. A communication strategy is necessary to manage investor relations.

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I am Daniel Owner and CEO of &

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