EuroFinance

The rising influence of cryptocurrency advocates in corporate boardrooms is heralding a transformative shift in the financial landscape. One example is the National Center for Public Policy Research (NCPPR), a think tank in the United States, which has intensified its push for tech giants like Amazon and Microsoft to consider allocating portions of their assets into Bitcoin. The appeal of Bitcoin has been underscored by its impressive surge of over 90% in the past 12 months.

Naresh Aggarwal, associate director of policy and technical at the Association of Corporate Treasurers, noted that large corporations tend to avoid cryptocurrencies, favoring more predictable and stable investment avenues. “For large, listed companies—those in the FTSE 100 or S&P 500—the tendency is to shy away from cryptocurrencies because of their volatility. Why would they invest in Bitcoin when traditional instruments like treasury bills or equity investments provide more predictable returns? For most corporate treasurers, digital assets are seen as too speculative and misaligned with the board’s expectations of secure, liquid, and predictable returns,” Aggarwal told EuroFinance.

From a treasurer’s perspective, the critical considerations are security, liquidity, and yield. Cryptocurrencies fail to align with these principles due to their inherent volatility, according to Aggarwal. “For most treasurers, managing a volatile asset portfolio, such as cryptocurrencies, is too time-consuming and risky, especially when the board expects secure and readily available funds.”

“It’s a very brave treasurer who decides to invest in cryptocurrencies like Bitcoin. The risk of losing value far outweighs any potential gains,” he said.

A call to action: NCPPR’s proposal

NCPPR’s proposal to Amazon emphasises the fiduciary duty of corporations to protect shareholder value, especially during inflationary periods. The think tank argues that companies should not only aim to increase profits but also safeguard these profits against currency debasement. In its statement, NCPPR remarked, “Corporations that invest their assets wisely can – and often do – increase shareholder value more than more portable businesses that don’t.”

Amazon’s financial filings as of December 30, 2024, reveal total assets of $624 billion, with $86 billion allocated to cash, cash equivalents, and marketable securities, including US government bonds, foreign government bonds, and corporate bonds.

NCPPR has proposed Amazon to explore Bitcoin as a viable addition to its treasury, stating, “Diversifying the balance sheet by including some Bitcoin solves this problem without taking on too much volatility. At minimum, Amazon should evaluate the benefits of holding some, even just 5%, of its assets in Bitcoin.”

When discussing investment strategies for companies, Aggarwal emphasised the importance of aligning investments with corporate objectives rather than pursuing speculative returns.

“Bitcoin is not a hedge against inflation—we’ve seen that clearly. While gold is often considered an inflation-proof investment, most businesses prioritise reinvesting funds into their operations. If surplus cash is held, it’s usually earmarked for specific purposes, such as buybacks or expansion projects. Alternative investments, like infrastructure, commodities, or even fine art and rare collectibles, can offer counter-cyclical or uncorrelated relationships to traditional markets. For entrepreneurial businesses, these might present opportunities, but Bitcoin’s risk profile makes it no better or worse than other speculative investments,” Aggarwal explained.

Microsoft’s cautionary stance

Unlike Amazon, Microsoft’s board of directors has taken a more cautious approach. The company’s board recommended a vote against a similar proposal, citing their existing processes for evaluating cryptocurrency investments. “This proposal requests that the Board conduct an assessment that is unnecessary because Microsoft’s management already carefully considers this topic,” Microsoft stated during its annual shareholders meeting. The company also highlighted the inherent volatility of cryptocurrencies, which poses challenges for corporate treasury applications requiring stable and predictable investments to ensure liquidity and operational funding.

A case study in bitcoin investment

MicroStrategy serves as an example of corporate investment in Bitcoin. Starting in 2020, the American business intelligence company began making significant Bitcoin purchases. Over the next two years, the company accumulated tens of thousands of bitcoins, and by September 2024, its holdings had grown to over 250,000 bitcoins, valued at approximately $6.85 billion. MicroStrategy’s strategy demonstrates the potential for substantial returns from cryptocurrency investments, even as it highlights the risks associated with volatility.

Critical Metals Corp, a mining development company has announced the company’s board of directors has approved the adoption of Bitcoin as a key asset in its treasury management program.

In a press release dated January 21, 2025, the company announced a convertible note financing agreement. This financing arrangement could provide up to $500 million, subject to the terms outlined in the Transaction Documents. The initial tranche of $100 million has already closed and may be allocated to Bitcoin purchases, contingent upon meeting specific conditions.

“The $100 million first tranche was issued with 100% warrant coverage, while subsequent tranches—totalling up to $400 million at the buyer’s discretion—will include 50% warrant coverage. This milestone makes Critical Metals Corp the first Nasdaq-listed critical minerals company to adopt Bitcoin as its primary treasury reserve asset,” the release said.

Milestones in 2024: a year of transformation

The year 2024 has been a landmark period for digital assets, with Bitcoin achieving several significant milestones. Chief among them was the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States. On January 10, 2024, the US Securities and Exchange Commission (SEC) approved the listing and trading of multiple spot Bitcoin exchange-traded product (ETP) shares. This move was widely regarded as a turning point in the institutional adoption of Bitcoin.

However, the SEC tempered its approval with a cautionary note. “While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin. Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto,” the SEC stated in its press release.

The political arena and bitcoin’s price surge

Bitcoin’s growing influence has extended beyond corporate boardrooms and into the political sphere. During the 2024 US presidential debates, digital assets took center stage, with President Donald Trump emerging as a prominent advocate for the industry. Trump’s pro-crypto stance has fueled optimism about the future of digital asset regulations, igniting a wave of investor confidence. This sentiment has been instrumental in Bitcoin’s meteoric rise past the $100,000 mark.

With Trump’s return to the Oval Office, expectations for a more favourable regulatory environment have intensified. “As the US has historically led the way in policy approaches to emerging industries, its newfound dovish stance on crypto could unlock global opportunities—from the integration of Bitcoin into strategic reserves to the development of a harmonized, comprehensive regulatory framework. This framework would provide much-needed clarity and confidence for issuers and service providers seeking to scale their operations globally,” the report noted.

The CCData report also emphasised the potential ripple effects of such a policy shift. “This will likely enable the proliferation of traditional entities looking to develop their digital asset strategy and explore ways to integrate blockchain technology into their day-to-day operations. We also expect this to lead to a flurry of new publicly listed digital asset businesses globally and the increased prevalence of Bitcoin being held on corporate balance sheets,” the report added.

On Trump’s return to the White House, “We can expect a more favorable regulatory framework for cryptocurrencies, primarily benefiting the retail market and driving up demand,” Aggarwal said.

According to the same report by CCData, Bitcoin’s price surge can be largely attributed to institutional adoption facilitated by the approval of spot ETFs. By the end of 2024, Bitcoin was trading at $106,831, cementing its status as a mainstream financial asset.

On January 23, President Trump signed an Executive Order to establish regulatory clarity for digital financial technology and secure America’s position as the world’s leader in the digital asset economy, driving innovation and economic opportunity for all Americans.

The Executive Order establishes the Presidential Working Group on Digital Asset Markets to bolster U.S. leadership in digital finance. This Working Group will be responsible for developing a comprehensive federal regulatory framework for digital assets, including stablecoins, and evaluating the potential creation of a strategic national digital assets stockpile.

The group will be chaired by the White House AI and Crypto Czar, and will include the Secretary of the Treasury, the Chairman of the Securities and Exchange Commission, as well as the heads of other relevant departments and agencies, as outlined in the White House release.

Navigating the road ahead

The growing interest in Bitcoin from both corporations and institutional investors reflects a broader shift in financial strategies. Companies like MicroStrategy have demonstrated the potential for cryptocurrency to act as a store of value, while proposals to tech giants like Amazon and Microsoft underline the increasing pressure on corporations to diversify their assets.

Yet, the road ahead is not without challenges. The volatility of digital assets remains a critical factor for corporate treasuries, and regulatory uncertainties continue to loom large. Nevertheless, the milestones achieved in 2024 indicate that Bitcoin is becoming an integral part of the global financial landscape.