Most Finance Execs Pass on Bitcoin as a Corporate Asset

February 22, 2021

Just 5% of Finance Executives Polled in February 2021 Said They Planned to Hold Bitcoin as a Corporate Asset in 2021

While bitcoin continues to grow in popularity, a poll of 77 finance executives (including 50 CFOs) this month showed that 84% of respondents said they did not plan to ever hold bitcoin as a corporate asset, according to Gartner.

“Eighty-four percent of the respondents said that bitcoin’s volatility posed a financial risk,” said Alexander Bant, chief of research in the Gartner Finance practice. “It would be extremely difficult to mitigate the kind of price swings seen in the cryptocurrency in the last five years.”

Volatility was the top concern by a large margin, but other big issues that respondents had were board risk aversion, slow adoption as an accepted form of payment, regulatory concerns, and a lack of expertise in cryptocurrencies (see Figure 1).

Figure 1. Top 3 Concerns for an Organization to Hold Bitcoin

“There are a lot of unresolved issues when it comes to the use of bitcoin as a corporate asset,” said Mr. Bant. “It’s unlikely that adoption will increase rapidly until we get more clarity on these challenges.”

Seventy-one percent of respondents said one of the top things they’d like to know is what others are actually doing with bitcoin. Sixty-eight percent want to hear more from regulators about bitcoin and better understand the risks involved with holding it.

“It’s important to remember this is a nascent phenomenon in the long timeline of corporate assets,” said Mr. Bant. “Finance leaders who are tasked with ensuring financial stability are not prone to making speculative leaps into unknown territory.”

Even the 16% of respondents willing to adopt the cryptocurrency as part of their organization’s financial strategy appeared in no rush. Five percent of respondents indicated they would begin to hold bitcoin in 2021, 1% said they’d hold bitcoin at some point in 2022-2023, and the remaining 9% who indicated they would begin holding bitcoin said it would be 2024 or later.

There was no difference in intent to hold bitcoin between small organizations (<$1Bn revenue) and large organizations (>$1Bn revenue). Fifty percent of respondents from the technology sector anticipate holding the cryptocurrency in the future. Private company finance executives were less favorable towards bitcoin with just 7% saying they would ever hold it.

"I'm not surprised that the overwhelming majority of respondents have decided to eschew Bitcoin. It is hardly prudent to invest corporate funds in an asset that has no relation to the trade or business in which the corporation is engaged and that is prone to wild and violent price swings, running the risk that the asset could dissipate based on the whims of the market for an asset that has, seemingly, little intrinsic value. It would be easier to justify such an investment if the company planned to "use" the Bitcoin as a medium of exchange or intended to pay dividends to its shareholders in the form of Bitcoin. Furthermore, the accounting treatment of Bitcoin is not ideal. It is treated as an "indefinite-lived" intangible asset and thus need not be "marked to market," (so the "holding" gains and losses are not reflected in income from continuing operations). Accordingly, even if the price drops, a corporate investor in Bitcoin would not have to record a "loss" on its financial statements. The company, therefore, might be able to avoid having to report to shareholders that its Bitcoin investment is eroding." said Robert Willens, Adjunct Professor at Columbia Business School.

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