Senior Client Partner, Global Head of FinTech, Payments, Crypto Practice
It used to be a novel idea that you could pay for everything from cars to dating-site memberships with Bitcoin. But by the end of 2021, corporate finance may be doing that and more, paying some bonuses, dividends, and stock in the digital currency.
At least that’s the notion a new and prolonged surge in Bitcoin has raised. Though the currency has certainly rallied—and crashed—before, experts say the driving force this time is less about market manipulation and more because regulators, institutional investors, and corporate leaders are starting to embrace its real value. The latest point bolstering the cryptocurrency case involves Tesla—an organization whose value has certainly experienced Bitcoin-esque surges. The carmaker announced Monday, in a regulatory filing, that it had purchased $1.5 billion in Bitcoin and expects to one day accept the cryptocurrency as payment for its vehicles. Later in the week, Bank of New York Mellon, the nation's oldest bank, said it will hold, transfer, and issue bitcoin and other cryptocurrencies on behalf of its asset-management clients
Deepali Vyas, a Korn Ferry senior client partner and global cohead of the firm’s Fintech practice, says the growth of digital currencies in general, and Bitcoin in particular, are at the point where corporate leaders need to start thinking seriously about how to incorporate them into their overall financial strategy. That doesn’t just mean accepting bitcoins as a form of payment either. Vyas points to Overstock’s distribution of a digital dividend to shareholders in September as a move other companies could replicate. She also suggests companies could start including digital currencies as part of their investment portfolio or for secondary stock offerings. “Corporate leaders are starting to see the true value of digital currencies to market functions and are expanding their view to incorporate more ways to use them,” says Vyas.
Bitcoin has surged before—only to fall back to earth. In 2017, the digital currency swelled to almost $20,000 before collapsing by 80% the next year, wiping out billions of dollars in the process. Experts say this time is different because, for example, a lack of regulation caused much of the last crash; digital currency operates outside the control of governments and banks. Since then, the Securities and Exchange Commission and the Internal Revenue Service have issued guidelines governing digital currencies. Moreover, President Biden has spoken openly about creating standardized regulations around digital currency.
“The hope is that regulators have had enough time to digest the newness of digital currencies and see the legitimate uses for it,” says Alan Guarino, vice chairman of Korn Ferry’s CEO and Board Services practice.
This time around, large, established investors and companies are buying into Bitcoin. The payment platforms PayPal and Square not only allow users to pay for goods and services with bitcoins but also invested in the digital currency. Fidelity is hiring talent to build out a digital wallet platform, and countries like China and companies such as Facebook have developed their own digital currencies. Guarino, who advises leaders and companies in the digital-currency sector, says part of the reason why players like these are embracing the technology now is because the ecosystem is more developed. “There’s more mainstream acceptance in the global market for the simple, efficient transactions digital currencies provide,” he says.
To be sure, perhaps the biggest difference for Bitcoin these days is that the infrastructure for it has improved, making it easier for people to convert digital currencies to cash. That ability has attracted the attention of private equity firms, hedge funds, and institutional investors that can more easily use digital currencies to trade and move into and out of investments. “Distribution of digital currencies is more efficient now, and these firms are starting to use them more because their customers want to use them more,” says Guarino.