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Over the last several quarters, Bitcoin has found a solid place on company balance sheets. Despite the fact that retail adoption has been increasing at a quicker rate recently, institutional investors are catching up and are close behind.
Unsurprisingly, statistics from Bitcoin Treasuries revealed that the majority of publicly traded corporations that hold Bitcoin are either specialist cryptocurrency business or blockchain enterprises. To begin, Michael Saylor’s MicroStrategy alone has about 92,000 Bitcoin. Other firms, like as Square Inc., Coinbase, and Galaxy Digital, have significant cryptocurrencies on their balance sheets as well.
Nonetheless, with non-crypto businesses such as Tesla and Nexon Co. Ltd. joining the larger crypto arena, the trend appears to be slowly turning.
Source: JP Morgan
Even if the difference was not huge, Q1 numbers show that Bitcoin’s retail flow outpaced institutional flow. Institutions, on the other hand, enjoyed an advantage over their counterparts in the fourth quarter of 2020.
However, the FASB, an SEC-recognized not-for-profit body that develops accounting standards, has yet to give definite guidelines for the accounting of digital assets and cryptos in particular, which Congressman Tom Emmer believes is a concern. Entities typically classify their holdings as intangibles, which has an impact on the balance sheet because they must almost “undervalue” the asset they are attempting to account for. Further elaborating the same on a recent podcast, he asserted,
“Yes, it can undervalue and at least in the present time, it gives them a tax benefit, but the risk is great in my mind.”
Since March, the number of entities holding Bitcoin has seen a series of V-shaped recoveries, as seen here. The same figure was on the edge of crossing the 27.5k threshold at the time of writing. Meanwhile, the supply controlled by entities with.01 BTC to 0.1 BTC has continued to expand unabated.
However, if the regulations are clarified, the trend of firms purchasing Bitcoin will continue, according to Emmer, and this will inspire more individuals and businesses to participate in the field. He continued,
“While it might be a benefit today, it could actually be a detriment in the future and I really think they need to clean this up from an accounting perspective, so that the people who are engaged in this industry don’t get surprised later.”