CFO Insights: Making change - Should bitcoin be on your balance sheet?

Published on: May 03, 2021

Throughout its 12-year history, bitcoin has been known for many things: wild swings in volatility, concerns about its potential use in criminal transactions, and occasional related cyberattacks. But in the last year, with its value skyrocketing, the fringe-dwelling digital currency has garnered mainstream attention by accepting invitations to appear on corporate balance sheets.

Most finance leaders appear to be taking a sit-and-see attitude, however. One survey of 77 finance executives found that only 5% intend to invest in bitcoin as a corporate asset this year. Why the hesitation? The list of concerns includes the financial risk associated with bitcoin’s volatility, worries over the depth and liquidity of cryptocurrency exchanges, and a lack of clarity around how bitcoin can—and cannot—be used.

Still, there are numerous reasons for a company to add digital assets to its balance sheet, whether it’s seeking the asymmetric risk return observed over previous years or as a natural hedge against fluctuating fiat currencies; whether it’s part of a corporate strategy to embrace modern, open technologies; or as a complement to an operational strategy that includes accepting digital assets as payments.

In this edition of CFO Insights, we’ll explore how bitcoin has earned Wall Street’s interest and discuss whether the upside is such that it deserves yours. In addition, we’ll ask how evolved are the tax and accounting rules around digital assets? What are the options for safekeeping? And what’s the most persuasive use case for it—as a hedge against inflation, an alternative to gold, or merely a bold demographic flex?

This publication was released by our US firm.


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