CFOs can’t avoid crypto—and 20% of large companies will use it in some way by 2024
Crypto may be crashing—but don’t expect the pressure on CFOs to know their stuff to lessen anytime soon.
“Our projection is that by 2024, at least 20% of large enterprises will use digital currencies for either payments, stored value or investments,” said Avivah Litan, distinguished analyst and vice president at research firm Gartner.
The progression of digital currencies will continue despite crypto’s recent downfall, Litan said. “Bitcoin has gone down 32% year to date,” she said at Gartner’s CFO and Finance Executive Conference in National Harbor, Maryland on Monday. “Is it really a Ponzi scheme?” she quipped. “Well, frankly, you should not conflate the value of the coin or the tokens with the value of the technology,” she explained. “Blockchain provides very unique characteristics. Cryptocurrency is the internet money we didn’t have in Web1. NFTs give users ownership over their assets. These are basic construction components for Web3. And they’re here to stay.”
Large corporations Apple, Google, and JP Morgan Chase are hiring experts and building out their infrastructure for crypto, she said. Meanwhile, “organizations that are transacting or using crypto for payments or rewards include Amazon, Dell, Shake Shack, Subway and Whole Foods,” Litan said. And “very conservative” financial institutions that are adopting crypto include BNY Mellon and State Street Bank, she said.
Litan pointed to the three different use cases:
–Stored value: “So if you believe one day they will be a hedge against inflation. You can go out and buy these cryptocurrencies.”
–Payments: “If your customers are pushing you into this; if your suppliers or partners want you to transact, you can use them for payments.”
–Investment: “Now investment is obviously the riskiest activity.”
Gartner conducted a global survey that found that 15% of boards of directors report that their organizations are currently planning to hold or transact in Bitcoin in the next two years, Litan said. Blockchain is “efficient and trustworthy,” she said. “It’s peer to peer; it’s immutable. And running money over these networks eliminates the middleman, and it allows a much more efficient and positive experience for the users.”
There are three types of digital currencies: crypto (like Bitcoin and Ethereum), stablecoin of which “the most of the popular ones are pegged to U.S. dollars,” and fiat currencies used by banks in digital form, she explained. So, a company can use the form of digital currency they’re most comfortable with.
But Litan advises CFOs to learn about the benefits of blockchain cryptocurrency transactions. “If you do make up your mind about a good use case for crypto, you don’t have to do it yourself,” Litan said. “There’s plenty of off-the-shelf solutions,” she said.
In May, the U.S. Securities and Exchange Commission announced it was adding 20 positions in its Crypto Assets and Cyber team, bringing the total to 50 to protect crypto investors from fraud. However, “there is really unique value in [blockchain] technology and in cryptocurrency,” Litan said. “[Even though] there’s a lot of fraud, a lot of security threats, doesn’t mean that the positive use cases won’t prevail.”
See you tomorrow.
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"There is a fire narrative, and that fire narrative is inflation. And then there is a bit of an ice narrative, that recession talk, hard landing or soft landing. We'll have these periods where it feels awfully fiery, and other periods where it feels icy, and clients need to navigate around that."
—Ted Pick, head of institutional securities at investment bank Morgan Stanley, said during the Bernstein Strategic Decisions Conference on June 1, as reported by Fortune.
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