A few years back, Bitcoin was more of a curiosity, however, that is starting to change with more than two dozen fortune 500 companies having cryptocurrencies in their balance sheets. Others are starting to provide services to interested Bitcoin buyers and to companies that want to hold it or accept it for securing payments.
Conventional Wall Street companies are helping push Bitcoin further by updating and redesigning their systems to extend the same facilities for crypto as they do for cash. In this view digital assets are therefore considered to be the future and are here to stay. The financial systems being put up for cryptocurrencies are expected to also be used in the future for other class assets such as bonds and funds.
Owning Bitcoin comes with direct security risks and therefore financial institutions can charge for custody services which they already do for other class assets. They will be able to collect fees for trading and holding clients’ cryptocurrencies as they do for other class assets and probably more. It may not be a surprise when institutions charge more for cryptocurrency assets due to the risks involved in this asset class and the extra technology requirements.
Here is a list of four fortune 500 companies that have taken interest in and invested in cryptocurrency.
- PayPal Holdings, Inc
- The Goldman Sachs Group. Inc
Square is a payments company with a market capitalization of $118.0 billion which facilitates both Cash App customers and sellers who want to buy Bitcoin. The company reportedly purchased 4,709 Bitcoin at $50 million in October 2020 and also recently purchased 3,318 Bitcoin at $170 million. With Bitcoin at an average price of $58,360 as of April 2021, Square’s assets rose from the initial investment of $220 million to $448.46 million. This represents a 112% gain which is more than double.
In addition, the company has been on a campaign drive promoting Bitcoin purchase through its popular Cash App. Its quarter-four shareholder report announced in February states that more than one million people purchased Bitcoin for the first time through their Cash App. It also shows that over three million customers bought and sold Bitcoin through their App in the past year alone. This increased their Bitcoin revenue by 9.7 times to over $4.5 billion in 2020.
Tesla an electric vehicle and clean energy company started buying Bitcoin for its balance sheet as indicated in the 10-K filing with the Security and Exchange Commission. In January 2021, it purchased $1.5 billion worth of Bitcoin and the 10-K report further indicates that it may attain and hold more digital assets from time to time or for the long term.
It is rumored that Tesla may start accepting Bitcoin as a form of payment in the future after it started giving details of how to make payments with Bitcoin on March 23rd, 2021. It is said that cryptocurrency could become a large part of the company’s cash stockpile if it continues to buy as part of its strategy.
Elon Musk, the driving force behind Tesla’s moves stated that they are not depending on any third-party digital wallet or network when announcing the acceptance of Bitcoin as payment. They will instead use their own software.
PayPal Holdings, Inc
Founded in the year 1998, PayPal first announced its interest in cryptocurrency in 2013, four years after the release of the Bitcoin White paper done by Satoshi Nakamoto. Just before the end of 2014, Paypal through partnerships with BitPay, Coinbase, and GoCoin made it viable for vendors to accept bitcoin payments.
Fast forward, Coinbase announced in December 2018 through a blog post that it had upgraded its integrated service with PayPal. This was to allow its customers to withdraw fiat currency directly from Coinbase into their PayPal accounts free of charge. This service was later extended to users in 32 European countries two months after its launch.
In 2019 PayPal made its first investment in cryptocurrency for an undisclosed amount by taking part in Cambridge Blockchain series A funding. In 2020, seven years after its first mention of entering the crypto space, PayPal users would finally be able to buy and sell certain cryptocurrencies directly through their platform.
Currently, this service is only available to U.S citizens however they have plans to extend it to UK customers. At the moment only Bitcoin Cash, Litecoin, and Ethereum are available for trading on its platform. PayPal customers can now convert their crypto assets into fiat money and use them to buy goods and services from the platform.
The Goldman Sachs Group
Goldman Sachs was said to be close to offering its initial investment vehicles for bitcoin including other digital assets to customers of its private wealth group. During the first quarter, Mary Rich, head of digital assets stated that the bank intends to start offering these investments in the second quarter of 2021 and indeed it has.
Goldman Sachs has since started trading bitcoin futures with a crypto merchant bank known as Galaxy Digital founded by Mike Novogratz. These trades depict the first time Goldman Sachs has used a digital assets firm as a counterparty since the set up of a cryptocurrency desk at the investment bank.
The moves by this global major investment bank could have a resounding effect on Wall Street as well as beyond banks. This is because clients who want exposure to bitcoin continue to mount pressure. According to Vaderwilt, a former partner at Goldman, the major dynamic with banks is there’s safety in numbers. When one bank starts doing this, the others will have a fear of being left out.
Goldman Sachs intends to sign in new liquidity providers to help expand their offering and Galaxy digital was signed in a few days ago. Max Minton, head of digital assets for the Goldman Asia-Pacific region, the bank aims to provide its customers with secure access and the best execution pricing to the cryptocurrency assets they want to trade.