Why consider using crypto?
Roughly 2,352 US businesses accept bitcoin, according to one estimate from late 2022, and that doesn’t include bitcoin ATMs1. An increasing number of companies worldwide are using bitcoin and other crypto and digital assets for a host of investment, operational, and transactional purposes. Based on a survey polling a sample of 2,000 senior executives at US consumer businesses, merchants are embracing digital currency payments with the hope of gaining a competitive advantage in the market and in the belief that the use of digital currency will continue to expand.2 Big brands are accepting customer payments in bitcoin to purchase everything from groceries to airline tickets.3 Some sports teams and associations are not only accepting cryptocurrency but also exploring the use of non-fungible tokens (NFTs) to create a more immersive fan experience.4 More and more retailers are accepting bitcoin to access additional customers who prefer to pay that way. One can even buy real estate using bitcoin.5 Several companies, in highly publicized moves, have invested millions of dollars in bitcoin.6 The adoption of crypto and digital assets is becoming even more common across various commercial and investment applications.7
The use of crypto for conducting business presents a host of opportunities and challenges. As with any new frontier, there are both strong incentives and unknown dangers. That’s why companies intent on using crypto in their businesses should have two things: a clear understanding of why they are undertaking that action and a list of the questions they should consider.
This publication endeavors to provide you and your company with an overview of the kinds of questions and insights that enterprises should consider as they determine whether and how to use crypto. So, if your company plans to participate in crypto, it’s important to think ahead, prepare, and engage in a thoughtful manner. (For considerations related to investing in cryptocurrencies and digital assets, please consult Deloitte’s complementary report, Corporations investing in crypto: Guidelines and considerations for companies on digital asset allocation).
The use of cryptocurrency in business Download the PDF
What can crypto do for your company?
To spark your company’s thinking about crypto, here are some of the rationales behind why some companies are currently using crypto:
Crypto may provide access to new demographic groups. Users often represent a more cutting-edge and tech-savvy clientele with disposable income for luxury goods and services. In fact, one recent survey found that 85% of surveyed merchants see crypto payments as a way to reach new customers, while 77% said they are accepting crypto because of its lower transaction fees8.
Introducing crypto now may help spur internal awareness in your company about this technology. It also may help position the company in this emerging space for a future that could include central bank digital currencies (CBDCs).
A greater awareness of the crypto industry and blockchain technology can introduce new investment and liquidity options through traditional investments that have been tokenized.
Crypto furnishes certain options that are simply not available with fiat currency. For example, programmable money can enable real-time and accurate revenue-sharing while enhancing transparency to facilitate back-office reconciliation.
More companies are finding that important clients and vendors want to engage by using crypto. Consequently, your business may need to be positioned to receive and disburse crypto to ensure smooth exchanges with key stakeholders.
Crypto provides a new avenue for enhancing a host of more traditional Treasury activities, such as:
Enabling simple, real-time, and secure money transfers.
Helping strengthen control over the capital of the enterprise.
Managing the risks and opportunities of engaging in digital investments.
Crypto may serve as an effective alternative or balancing asset to cash, which may depreciate over time due to inflation. Crypto is an investable asset, and some have performed exceedingly well over the past seven years9. There are, of course, clear volatility risks that need to be thoughtfully considered.
The decision to use crypto for Operations may require a different way of thinking from that behind the use of crypto for investments:
Investing in crypto is typically a longer-term play; using it in Operations often requires an even more thoughtful process for handling real-time decisions.
Using crypto in daily operations could help develop new means of innovative commerce. That’s in addition to possibly extending the company’s reach in the marketplace—not only to new customers, but also to new counterparties.
When using crypto, companies should navigate important onboarding issues, such as regulatory, accounting, and tax issues for which there is currently limited guidance from regulators.
Two primary paths for using crypto
The first question to ask when considering using crypto in your company’s operations is: Do we hold crypto on our balance sheet or simply adopt crypto-enabled payments? To determine an appropriate path for your business, you should consider how it aligns with your business objectives. Consider the potential benefits, drawbacks, costs, risks, system requirements, and more. The following sections provide some broad considerations around two different paths as your company embarks on its crypto journey.
Enabling payments: “Hands-off”
Some companies use crypto just to facilitate payments. One avenue to facilitate payments is to simply convert in and out of crypto to fiat currency to receive or make payments without actually touching it. In other words, the company is taking a “hands-off” approach by using a service provider to do the conversion and thus keep crypto itself off the books.
Enabling crypto payments, such as bitcoin, without bringing it onto the company’s balance sheet may be a quick and easy entry point into the use of digital assets. It may require the fewest adjustments across the spectrum of corporate functions and may serve immediate goals, such as reaching a new clientele and growing the volume of each sales transaction. Enterprises adopting this limited use of crypto typically rely on third-party vendors.
The third-party vendor, acting as an agent for the company, accepts or makes payments in crypto through conversion into and out of fiat currency. This may be the simplest option to pursue. And, likely, it may cause relatively few disruptions to a company’s internal functions since the hands-off approach keeps crypto off the corporate balance sheet.
The third-party vendor, which will charge a fee for this service, handles the bulk of the technical questions and manages a number of risk, compliance, and controls issues on behalf of the company. That does not mean, however, that the company is necessarily absolved from all responsibility for risk, compliance, and internal controls issues. Companies still need to consider whether the service provider they select is paying careful attention to issues such as anti-money laundering (AML) and know your customer (KYC) requirements. And of course, they also need to abide by any restrictions set by the Office of Foreign Assets Control (OFAC), the agency that administers and enforces economic and trade sanctions set by the US government.
