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Can Crypto Stablecoins be used to Transform Treasury Operations of Companies?

Recent government notification seeking disclosure of Crypto transactions &  holdings, so in light of that development, Can Crypto Stablecoins be used to Transform Treasury Operations of companies in India?

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

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