Most of us will have read at least one article on cryptocurrencies and digital assets over the past 12 months. Some will have looked into it in more detail through Association of Corporate Treasurers (ACT) webinars, content at ACT conferences and through articles in The Treasurer.
For those doing the ACT Certificate in International Cash Management, there is a section focused on the digital asset ecosystem. However, for others, it can be hard to know where to start.
Drawing on the expertise of two key market participants – Arca and Copper – the ACT has curated a programme of four webinars supported by articles that will take you from a basic understanding of the market through to what you would need to do if you wanted to actually participate.
The webinars are structured around the following three topics…
The first webinar will explore the market ecosystem. Most of us will have heard of Bitcoin, but did you know there are more than 6,000 other cryptocurrencies? Some currencies (such as Bitcoin) are highly volatile, while others like the USD Coin are tied to a single currency (in this case the US dollar). Each of these currencies have different characteristics and different types of risk associated with them.
Having ignored or banned them for many years, regulators across the world are learning to accept that these currencies are here to stay. As such, they are all developing their own rule books. Although a final set of rules is still some way off, some regulators are communicating their thinking, and some are consulting on their approach. Either way, any understanding of the market requires a sense of the approach being adopted by the regulators, and this webinar will share some thoughts on this critical area.
Joining this webinar will give you a great foundation in the world of digital assets: understanding key aspects of the market, what the different types of currency are (along with their associated risks), along with a view of how they sit from the perspective of the regulator. It will give you the tools to have an informed conversation with your board and other key stakeholders about the risks and opportunities this market offers.
Custody and settlement
Having provided a basic introduction to the world of digital assets, the second webinar will focus on practical matters when trading cryptocurrencies – specifically, security and custody issues.
Many of us will be familiar with stories of how investors have lost money as a result of investing in digital assets, and new stories continue to hit the newswires. However, the chart below, portraying market capitalisation and volumes over the past five years, shows how big the market has grown – market activity by corporates in the first half of 2021 was reportedly almost $8bn.
But how do you participate in the market without having the security of the assets compromised? What are the different types of market participant and what roles do they play? How different is this to the part played by traditional custody agents? And having arranged safe custody of your assets, how do you ensure they can be settled safely and securely?
Led by Copper, this webinar will explore the world of custody and settlement, and the key questions you need to ask of any of your suppliers to ensure you fulfil your role as treasurer of protecting the assets of your company.
Companies may invest in digital assets for a variety of reasons.
For example, as part of the overall investment strategy. One example is MicroStrategy Inc, which announced in December 2020, that it had made more than $1bn Bitcoin purchases in 2020 – a move characterised as an investment that would “provide the opportunity for better returns and preserve the value of our capital over time compared to holding cash”.
Additionally, there have been a number of claims of the risk-mitigation benefits of holding these types of currencies – as a hedge against inflation, part of a diversified portfolio of assets or as a noncyclical alternative investment (like a bottle of wine).
Whatever the reason, a number of companies have already started to explore the benefits and risks associated with investing in digital assets. Not many have the appetite of MicroStrategy, but are dipping their foot in the pool and investing cautiously at first.
Getting the right tax and accounting treatment is critical for any successful investment strategy, and there have been several recent announcements regarding how the authorities will treat any price movement in these digital assets.
This third webinar, led by Arca, will explore how different types of digital assets can play a role in an investment strategy and help you understand some of the potential tax and accounting and reporting implications.
The final webinar will form part of the ACT’s Festival of Treasury Transformation (you can book here). It will bring together material discussed at the previous three webinars to enable you to understand the complete journey in investing in digital assets – from a basic understanding of the market to the different market participants, through to implementing an effective investment strategy and will be the perfect opportunity to ask questions that have occurred to you having watched earlier webinars.
Naresh Aggarwal is associate director in the ACT’s policy and technical team.
8 September | What are digital assets?
6 October | How do you manage the security of investing, redeeming and owning digital assets?
3 November | The role of digital assets as part of an investment strategy
23 November | Digital assets in 2021 and beyond
Find out more and book your free place at the webinars.