MW MicroStrategy's bitcoin bet has made its stock a big winner. Will other companies soon follow suit?
By Frances Yue
Welcome back to Distributed Ledger. This is Frances Yue, crypto reporter at MarketWatch.
Next week on Dec. 10, Microsoft $(MSFT)$ shareholders will vote on a proposal submitted by the National Center for Public Policy Research about whether to add bitcoin to the company's balance sheet.
However, the tech giant's board of directors have advised shareholders to vote against the proposal, according to a 14a filing with the U.S. Securities and Exchange Commission.
In the company statement in opposition, the board said Microsoft's Global Treasury and Investment Services team has been evaluating a variety of investible assets including bitcoin.
"Volatility is a factor to consider in evaluating cryptocurrency investments for corporate treasury applications that require stable and predictable investments to ensure liquidity and operational funding," the board wrote.
"Microsoft has strong and appropriate processes in place to manage and diversify its corporate treasury for the long-term benefit of shareholders and this requested public assessment is unwarranted," according to the board.
Only 31 public companies listed across the world, including MicroStrategy $(MSTR.AU)$, Marathon Digital $(MARA)$, Tesla $(TSLA)$ and Coinbase $(COIN)$, hold bitcoin on their balance sheets, according to data from CoinGecko.
MicroStrategy, which holds 402,100 bitcoins in its balance sheet, has greatly benefited bitcoin's rally this year. The business intelligence company, which is often seen as a bitcoin hedge fund proxy, saw its shares up 514% year to date, according to Dow Jones Market Data. Bitcoin has gained 131% so far this year.
In fact, Michael Saylor, executive chairman at MicroStrategy, spoke to Microsoft's board of directors in a three-minute presentation on Dec. 1 about why the company should adopt bitcoin.
I caught up with Anthony Rousseau, head of brokerage solutions product management at TradeStation, about what it would take for more companies to add bitcoin into their balance sheets.
What it takes
For more companies to add bitcoin to their balance sheet, "I think the big thing is for more traditional names, the Morgan Stanleys of the world to move into the space, and for banks to take over crypto custody," Rousseau said.
"What companies are going to want is to interact with the same counterparties they interact with today in other asset classes," Rousseau said in a phone interview.
Industry participants have also been hoping to see a change in the accounting guidance issued by the Securities and Exchange Commission, which has asked public companies including banks to recognize the crypto they custody as liabilities on their balance sheets. Under such guidance, banks have to set aside assets that are worth a similar amount to protect against losses to comply with their capital requirements.
Crypto infrastructure will also have to catch up to make it easier for companies to add bitcoin into their balance sheets, Rousseau noted.
Crypto in a snap
Bitcoin (BTCUSD) has increased 0.3% over the past seven days, to around $96,874 at the time of writing Wednesday. Ether (ETHUSD) has climbed 5.4% over the past seven days, to around $3,834, according to Dow Jones Market Data.
Must-reads
-- Trump's win fueled crypto XRP's rally to a new high. Why its gains may last. (MarketWatch)
-- Trump nominates cryptocurrency advocate Paul Atkins as SEC chair (MarketWatch)
-- Founder of failed crypto lending platform Celsius pleads guilty to fraud charges (MarketWatch)
-- U.K. uncovers vast crypto laundering scheme for gangsters and Russian spies (Financial Times)
-Frances Yue
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December 04, 2024 16:55 ET (21:55 GMT)
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