Should Your Business Have a Digital Asset Strategy?

In the early 2000s, the internet was rapidly becoming a powerful tool for businesses to reach out to customers and conduct commerce. The dot-com boom had just taken place, and many businesses were investing heavily in developing an online presence. It was essential for every company to have an internet strategy in order to keep up with the competition and take advantage of the new opportunities presented by the internet. It allowed businesses to differentiate themselves, expand their client base, reduce costs, and improve their bottom line.

The adoption of digital assets and blockchain technology is accelerating at a faster pace than the adoption of the internet did, and thereby becoming a notable aspect of the business landscape which now include Non-Fungible Tokens (NFTs) and some pioneering Central Bank Digital Currencies (CBDCs).

It is telling that the IMF has come full circle from warning against CBDCs to now promoting their development as “more than half of the world’s Central Banks are exploring or developing Digital Currencies” to avoid customer bank deposits exiting the fiat banking system at a time when some large banks have already failed, and bank credit risks are headline news.

Listed companies hold over 1%[1] of the total Bitcoin (BTC) supply with an increasing number of companies using BTC as part of their corporate treasury. A recent report released by Goldman Sachs entitled “Eyes on the Horizon: Family Office Investment Insights” noted that 32% of family or home offices currently have digital asset investments.

It is therefore becoming crucial for dynamic businesses to have a basic understanding of digital assets and recognise how digital assets are innovating and changing the financial landscape. A digital asset strategy goes further by planning how a business can use digital assets and blockchain technology to achieve and enhance its business objectives. This could include accepting digital assets as forms of near real-time payment (increasing revenue, eliminating accounts receivable), or for customer loyalty rewards, liquidity management (whilst potentially eliminating custodian credit risk), and investment strategy (provide a hedge against inflation or diversify a company's financial portfolio). In addition, certain firms can leverage blockchain technology in supply chain management for enhanced efficiency and security in their own operations.

Digital assets are clearly here to stay and with evolving data transaction heuristics and attributions, can be expected to eliminate any long-term need for paper notes and coins that are inherently more prone to fraud.

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MHA has the expertise and the team to help you maximise your digital asset strategy.