January 13, 2022
Alex Song has invested in a lot of esoteric financial products over the years.
Mortgage-backed securities. Litigation financing. Whatever it might be, the former private credit and financial technology investor, who previously worked at Sculptor Capital Management, Bain Capital, and Morgan Stanley, likely has some experience or interest in it.
So, it was only fitting that Song would take a slightly untraditional approach to managing a corporate treasury where securities like government bonds and investment-grade corporate debt have historically been finance executives’ preferred investments.
On Thursday, Ramp—the corporate card start-up where Song is now head of finance and capital markets— announced that it has been putting the “significant amount” of 5% of its corporate treasury into stablecoins through Circle’s Yield product. Built on the Circle-issued USD Coin, which is pegged to the U.S. dollar on a 1-to-1 basis, and fully secured by Bitcoin collateral, the offering promises companies access to “new, profitable ways to build corporate treasury programs via rapidly growing digital asset lending markets,” according to a Circle blog post.
The move comes as finance chiefs across corporate America continue to weigh whether to allocate part of their treasuries to the often volatile world of cryptocurrencies.
Bitcoin bull-led companies such as Michael Saylor’s MicroStrategy, Jack Dorsey’s Block, and Elon Musk’s Tesla have been plowing massive chunks of money into the world’s largest cryptocurrency for years now, of course. But others like Twitter CFO Ned Segal have expressed concerns. At an event hosted by The Wall Street Journal, Robinhood Markets CFO Jason Warnick said this week that “there aren’t compelling reasons strategically for our business to put any meaningful amount of our corporate cash into cryptocurrencies.”
For Song, stablecoins might represent a middle ground of sorts, one that provides exposure to the quickly growing cryptoverse but also less volatility than directly investing in something like Bitcoin, the Ramp executive recently told me.
Ramp’s corporate treasury is still primarily invested in traditional assets like government, corporate, and municipal bonds. The average duration of the holdings is about a year, with the yield coming in at around 0.4% in late November, Song says, though he adds that is likely higher now with interest rates on the rise.
The investment in stablecoins is paying off, so far, though. Because the stablecoins have a higher yield, Song says, than, say, an investment-grade corporate bond, that 5% allocation Ramp has made to stablecoins is able to provide it with the same level of returns it would see from a 95% allocation to those bonds. (Ramp declined to comment on how much in dollar-terms its allocation comes out to be.) And that already has Song thinking about increasing Ramp’s investments in stablecoins down the road.
“It’s definitely a dynamic exercise,” Song says.
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And with that, I say see you soon.
Last week, I mentioned that The Ledger would be going on a pause, and here we are. My wife and I are expecting our second pandemic baby any day now—so I’ll be taking some time off from work, and, as a result, The Ledger.
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Don’t worry, though. I’ll be back soon enough—keep an eye on your inboxes come March. Until then, feel free to drop any scoops, feedback, or news in my inbox. You know where to find me:
Declan Harty
@declanharty
Declan.harty@fortune.com
