Taking A Second Look: Corporates Reconsider Cryptocurrencies

# Cryptocurrency and Stablecoins

# Risk Management

Members share their curiosity about embracing cryptocurrency amid more regulation.

Efforts by central banks and finance ministers to block the widespread use of digital currencies until strong regulation is in place—along with the emergence of new types of currencies—are leading some corporates to reconsider earlier decisions to avoid accepting cryptocurrencies as payment.

That is among the takeaways from a discussion at a recent meeting of NeuGroup for Retail Treasury, sponsored by U.S. Bank, during which one member said her company, encouraged by the outlook for regulation, is actively considering options to accept digital currency in the future.

In the news. On Tuesday, the Financial Stability Board issued recommendations for the regulation, supervision and oversight of global stablecoins—such as Libra, a stablecoin proposed by Facebook—which aim to counter the high volatility of crypto assets like Bitcoin by tying the stablecoin’s value to other assets, including sovereign currencies.

On the same day, financial leaders of the world’s seven biggest economies reiterated their opposition to unregulated digital payment services, stating that “no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements.”

“You’re going to see a lot more government-related actions, and a lot more focus on that area,” the NeuGroup member whose company is now interested cryptocurrency said late last month.

“I think governments are taking a more detailed look at what this really needs and how that could complement their financial systems.”

Another member agreed that recent developments—including news about Libra—have piqued their interest, saying, “It’s something we’re keeping our eye on, but haven’t pulled the trigger yet. It’s worth watching closely.”

Mixed reactions and experiences. To be sure, not all the treasurers at the meeting had the same level of interest, with some expressing a cautious curiosity and one saying the issue “isn’t even on our radar.”

One member said their company attempted to accept cryptocurrency payments nearly ten years ago. “Merchants did not necessarily want to adopt because it was so volatile,” she said. “One day it could be worth $10, another day it could be a thousand. You didn’t know what you were getting on any specific day. So we shut that down as an option.”

Another treasurer said an online-only competitor needed to implement a workaround to accept bitcoin. “They were accepting it through a wallet that would access intermediaries that the customer wanted to use, and they would flip it to US dollars that would actually transact on site,” he said. “They were also keeping a portion of it, which created some accounting issues on their balance sheet.”

The member whose company stopped accepting cryptocurrency agreed that there are complications having digital currency on a balance sheet. “Accounting regulations-wise, how you deal with a crypto asset or liability isn’t that straightforward,” she said. “Depending on who you are, where you are, you have to take your own rules and decide how you deal with it.”