Treasury’s trajectory amid digital assets adoption has been saved
Analysis
Treasury’s trajectory amid digital assets adoption
Creating a bankable treasury strategy that optimizes opportunities
With worldwide revenue of digital assets projected to reach $102.7B and the number of users projected to reach 994.3M by 20271, having an extensive treasury strategy that adheres to the organization’s established policies, procedures, and risk tolerance blueprint has become an essential component of digital assets adoption.
Organizations that effectively deploy digital assets adoption strategies and solutions can significantly bolster their investment, operational, and transactional footprint globally, giving them a competitive edge. However, with this tremendous opportunity comes macroeconomic risk, as highlighted by recent banking collapses and instability of crypto exchanges. This emphasizes the importance of treasurers being involved during an organization’s digital asset adoption. Whether it be payment utilization of stablecoins, deploying digital assets to a counterparty via custodianship, or determining digital asset positions through pooling processes, many of these impacts encompass treasury operations. With durable procedures in place—whether it be hedging and derivative contracts, intercompany funding, treasury management system integration (TMS), balance sheet exposure tracking, internal controls, and much more—an organization can significantly reduce its risk and function more effectively.
Digital assets: A treasurer’s perspective:
Digital asset bridge: Custodians and wallets
Digital assets provide institutions the ability to become their own banks or custodians, more account management options, and the flexibility and accessibility to overall risk reduction based on wallets utilized.
${header-title}
${column1-large-text}
Custodians:
- Traditional banking environment: In the current landscape, a custodian bank is a bank whose responsibility as a financial institution is to hold its customers’ securities for safekeeping to prevent them from being stolen or lost. A custodian bank may also hold stocks or other assets in electronic or physical form on behalf of its customers, keeping them safe by minimizing the risk of theft or loss.
- Digital assets environment: This is similar to traditional banks, where one can store coins, manage liquidity, and protect assets from theft. Yet, just like physical assets, one has the option to store money personally using a non-custodial option where a corporation can protect itself and safeguard its assets by managing them directly via wallet or storage.
${column2-large-text}
Wallet management:
- Traditional financial environment: A bank account renders services to allow financial transactions via applications or online software and is used for various activities ranging from paying bills to transferring money.
- Digital assets environment: A digital asset wallet is the same as a traditional bank account; however, it has more options spanning hardware and online wallets, which provide a plethora of conveniences, including speed, transparency, simplicity, and accessibility. Digital wallets render traditional wallets/purses obsolete, and only a smartphone is needed to perform all management and POS (point of sale) transactions.
${column3-large-text}
${column3-title}
${column3-text}
${column4-large-text}
${column4-title}
${column4-text}
Potential rewards and possible pitfalls
Traditional payment systems and liquidity management solutions are being complemented, and sometimes even replaced, by the emergence of digital assets and cryptocurrencies. While careful consideration must be given to regulatory, volatility, and security aspects, the potential benefits of enhanced efficiency, global accessibility, improved liquidity management, transparency, and innovation make them an intriguing option for forward-thinking businesses. As the landscape of finance continues to evolve, it benefits corporate treasurers to stay informed and nimble to leverage the opportunities presented by digital assets and cryptocurrencies.
TMS integration and interoperability
As digital asset use cases and real-world applications converge, the expressed need for integrated systems and platforms becomes essential. Organizations’ “technology stack” consists of software, tools, and frameworks to build and operate digital asset–related applications and systems. There are various considerations and advantages to be cognizant of when integrating Treasury Management Systems (TMS) capabilities with digital asset activity. While detailed consideration needs to be given to logical access management, platform design capabilities, and risk mitigation, the potential benefits of enhanced visibility, working capital management, data analytics, automation and robotic process automation, counterparty connectivity, and infrastructure and security create additional opportunities for the foreseeable future. As the digital asset arena continues to evolve, organizations with a soundproof, effective technology ecosystem will prosper and have the expertise to lead their businesses.
Treasury digital asset risk management
Other considerations
Time for transformation
Adoption of digital asset utilization is a key area that will likely require new processes and controls that span and permeate all areas and terrains incorporated with the treasury. The possibilities raise newfound opportunities that can be executed incrementally, providing ample time for organizations to develop and implement a digital asset strategy.
Digital assets: Read the full report
Endnotes
1 Statista, “Digital assets – worldwide,” April 2023.
About Blockchain & Digital Assets at Deloitte
At Deloitte, our people work globally with clients, regulators, and policymakers to understand how blockchain and digital assets are changing the face of business and government today. New ecosystems are developing blockchain-based infrastructure and solutions to create innovative business models and disrupt traditional ones. This is occurring in virtually every industry and in most jurisdictions globally. Learn more at deloitte.com/us/blockchainanddigitalassets.
Get in touch
Kesavan Thuppil | Andrew Pinto |
Opek Farodoye | Nick Stover |
PJ Theisen | Conor K. O’Brien |
This article contains general information only and Deloitte is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser.
Deloitte shall not be responsible for any loss sustained by any person who relies on this article.
As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting.
Copyright © 2023 Deloitte Development LLC. All rights reserved.
Recommendations
Digital asset risk management diagnostic
Identify digital asset and blockchain risks to gain a competitive advantage and meet regulatory expectations
Crypto and digital assets regulatory digest collection
Insights for the banking and capital markets industry
