Can Crypto Stablecoins be used to Transform Treasury Operations of Companies?
seeking disclosure of Crypto transactions & holdings, so in light of that development, Can Crypto
Indian Government seeks disclosure of Crypto transactions, holdings
Ministry of corporate affairs (MCA) has asked all companies in the country to mandatorily disclose any dealings in cryptocurrency or virtual currency in their balance sheets.
The companies have to disclose profit or loss on transactions involving cryptocurrency or virtual currency, the amount of holding, and details of deposits or advances from any person for the purpose of trading or investing in cryptocurrency or virtual currency, according to the latest amendments to the Schedule III of the Companies Act, 2013. This will be applicable from the upcoming financial year, MCA.
So can Crypto Stablecoins be used to Transform Treasury Operations of Companies?
Payments represent the core element of the transition from an industrial economy to the so-called digital economy, which will gradually reach every corner of the world thanks to the ongoing digitization process. Blockchain plays a crucial role in this paradigm shift, in which value is generated by technology-powered links between individuals, businesses, and governments.
While Bitcoin was originally meant to be global peer-to-peer money for online payments, the original cryptocurrency ended up as an investment asset and a store of value rather than a medium of exchange, mainly because of its high volatility.
In recent years, public-traded companies like MicroStrategy, Square, and Tesla have been adding Bitcoin to their balance sheets as cash reserves, while institutional investors are adding the “digital gold” to their portfolios as a diversification asset, highlighting the acceptance of crypto as an asset class.
But this is only the beginning of the convergence between traditional finance and crypto finance. The emergence of stablecoins addresses Bitcoin’s volatility issue and brings more functionality to digital payments. For example USDC is issued by regulated financial institutions, backed by fully reserved assets, and redeemable on a 1:1 basis for US dollars.
Unlike volatile cryptocurrencies, dollar digital stablecoins can be utilized to efficiently process global payments, execute mass payouts, handle multi-dimensional online payments, and hold dollar-denominated value regardless of where you are located in the world. Stablecoins are, therefore, perfectly positioned to transform payments and empower the digital economy.
Stablecoins & Treasury Management
Increasingly, institutions are tapping into the potential of digital assets through stablecoins.
Dollar digital stablecoins, such as USD Coin (USDC), can help corporate treasuries and financial institutions leverage the DeFi and CeFi opportunities that can provide higher yields than traditional debt instruments.
Treasuries can also use stablecoins for business-to-business payments as well as multi-directional internal and external payments, which will be more affordable compared to traditional payment rails.
Following the trend of corporations and institutions adding Bitcoin to their balance sheets and portfolios, companies and financial institutions will convert dollars to dollar digital stablecoins like USDC as a gateway to yield-earning opportunities in the DeFi and CeFi markets.
Corporate adoption of dollar digital stablecoins will continue to accelerate to the point where businesses will be able to convert their cash reserves into stablecoins and then use their on-chain dollar stablecoins for B2B payments, handle payouts, or store funds as reserves.
Conclusion
Thanks to stablecoins, corporate treasuries can digitize their capital and focus on investment products that can secure better yields than other fixed-income securities.
Dollar digital stablecoins will transform treasury operationsand can enable more efficient capital allocation, frictionless global payments, and, ultimately, a more connected economy.
DISCLAIMER
The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that we are not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. CA Mitesh and Associates is Mumbai's leading Cryptocurrency Taxation Firm which is committed to helping people navigate complex tax laws and banking regulations. Our main aim is to assist the individuals with applicable laws & regulations compliance and providing support at each & every level to make sure that they stay compliant and grow continuously. For any query, help or feedback you may get in touch here - Appointment with CA. Please note the all consultations with the CA are Paid consultations.
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