The Use of Crypto Currencies in Businesses

Moving away from it being only described as a haven for criminals, crypto currencies and the blockchain have gone mainstream in recent years.

The 2020 surge of crypto currencies and digital assets captured the attention of large organisations and C-suite executives all over the world, with Fintech giants like PayPal allowing their 377 million merchant accounts to utilise bitcoin, ethereum and Litecoin payments for their everyday use.

Other Companies, like Tesla, now hold a significant amount of bitcoin on their balance sheet and they continue to use and experiment with the blockchain and crypto currencies , with the company recently beginning to accept payments in dodge coin for their merchandise.

Crypto currencies and other digital assets are fast being adopted and utilised by companies worldwide for a a number of reasons ranging from investment, to operational and transactional purposes.

These ways in which a company can utilise crypto currencies sets out the methods in which other companies, who wish to explore crypto, can chart and begin their crypto journey. Companies can hold crypto currencies on their balance sheet (with most companies choosing to hold ethereum and bitcoin) or they can utilise crypto currencies to enable payments.

The best way to begin the evaluation of how a company will utilise crypto is internally ask: Will we adopt a longterm approach and hold crypto on our balance sheet? or will we simply adopt crypto for operational and transactional purposes?

Both of these paths have benefits and risks which should be weighed against the business’ objectives when making this decision.

Holding Crypto on the Balance Sheet

Most countries current book keeping rules/standards make no reference to accounting for crypto currencies, some current recommendations state that companies should account for bitcoin under rules for “intangible assets” such as intellectual property. This would entail that companies record the value of bitcoin at the time of purchase in their accounts and if the price rises, they cannot log those gains until they sell. Yet if the value of bitcoin drops, the company must write down the value of their holdings as an impairment charge.

Tesla is one company that follows this, and in a regulatory filing, it was reported that bitcoin would be accounted for as “indefinite-lived intangible assets”, warning it could face impairment charges if their price falls.

In other areas, where companies operate under a separate set of rules, crypto is accounted for differently. It can be held as inventories at cost price.

Researching which standards would best be applicable for the company while considering the companies jurisdiction and business objectives would be an important activity in the pilot stage of crypto adoption in the business.

Tax considerations should also be considered as companies can be liable for capital gains tax whenever they sell a cryptocurrency. The amount of tax paid will depend on how long they have held the coin and the market value at the time of the transaction.


Before Paypal enabled crypto payments for their users, most companies used crypto as an investable asset, much like Gold, that they would hold for a period of time. Following the successful use case from Paypal more companies are now using crypto to facilitate payments and extend the companies reach to locations where they had no jurisdiction.

If a business wishes to utilise Crypto for payments, they have two approaches that they can consider to achieve this objective:

Using crypto to enable payments with an “Indirect” approach

One way to make payments with crypto is to simply convert in and out of crypto to a fiat currency in order to receive or make payments without actually directly booking it. In other words, the company would be taking an “indirect” approach that keeps crypto off their accounting records.

This approach all likelihood, may cause relatively few disruptions to a company’s internal functions and may be the simplest way to begin exploring the use cases of crypto, since the approach keeps crypto off the corporate balance sheet.

With this approach a lot of risk will usually fall to the third-part vendor, that will be used to make these transactions on behalf of the company, who will charge a fee for the service provided.

Companies still need to pay careful attention to issues such as anti-money laundering and know your customer (AML and KYC) requirements.

Using crypto to Enable payments with an “Direct” approach

This approach requires the company to go beyond simply enabling crypto payments and integrate the crypto adoption within its operations and within the treasury functions of the business.

In order to have a direct approach of utilising crypto and experiencing the full benefits of crypto, the company will need to set up and consider a number of technical matters to ensure its success.

The company will have to set up Wallets.

Currently, companies or individuals, would have to set up a digital wallet if they wish to utilise crypto payments. The treasury function of the organisation will have to set up an appropriate wallet structure that is fundamental to a successful crypto treasury function. 

A lot of companies have adopted a multitiered structure whereby hot wallets( cryptocurrency wallet that is always connected to the internet and cryptocurrency network) are used as operational accounts, as opposed to cold wallets(a wallet that is not connected to the internet and therefore stands a far lesser risk of being compromised) that are used to store value.

The company will also have to Consider the Taxation and accounting of crypto transactions.

An organisation has to pay attention to the tax and accounting needs of crypto transactions in this approach.

Crypto transactions are not the the easiest transactions to account for, and as stated earlier Crypto they are generally considered an intangible asset, and if not strategically planned out efficiently for operational and transactional use, it may well warrant adjustments or additional disclosures to the balance sheet, P&L and cash flow statements, among other financial documents.

Just like revenue, it is important to keep appropriate documentation on how the value for crypto transactions was determined.

Other aspects to look into when setting up the crypto structure of the organisation would be the Money Laundering and KYC regulations , Risks, Vendor and custodial partner and difficulty of integration of these transactions into treasury and operations.

Can we Introduce Crypto into the companies operations?

It is currently still not an easy process to introduce crypto into the companies operations and they are many hurdles to overcome for it to be fully integrated in the company.

Many companies begin by having a pilot of crypto transactions in order to fully unravel the benefits and use cases of crypto and this would be the best approach as for many, this is still a learning. You could begin by asking internally questions that would chart out a short-term and long-term purpose for your organisation.

There is no denying that cryptocurrencies have had a significant impact on the world and driving many institutions to reconsider their strategy as they seek new methods to improve business and financial operations, and financial positions of the company.

Still, significant constraints remain to prevent its easy and widespread use for organisations but they are startups and organisations globally currently working on changing that.

By Chomwa Shikati
I write about crypto, Fintechs and Finance | A Finance Leader (CFO) | Building in Africa and in Europe

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