CFO Intelligence Magazine – Winter 2022
Mark D. Mishler
MBA, CPA, CMA
Today, more companies are transacting in cryptocurrencies or blockchain-tethered digital forms of money like Bitcoin and Ethereum that are neither issued by nor backed by a country’s government. Transactions encompass accepting cryptocurrency (also known as cyber[1]currency) for customer payments, paying suppliers in cryptocurrency, or making cryptocurrency investments.
The word ‘crypto’ comes from the Greek word kruptós, meaning ‘hidden’ or ‘secret’ and the U.S. government considers cryptocur[1]rency to be crypto, not currency, so CFOs evaluating whether their company should transact in cryptocurrencies need to be aware of differences in the accounting and tax treatment of cryptocurrencies, compared to traditional currency. They should also consider such issues as cryptocurrency risk management and internal control considerations.
Organizations that accept cryptocurrency include the Dallas Mavericks, which accepts Bitcoin as a payment method for both game tickets and merchandise. In February 2021, Elon Musk announced that Tesla would accept bitcoin payments, and Tesla invested $1.5 billion in bitcoin. That summer, however, Tesla reversed its transaction policy — although not its investment — due to bitcoin-mining environmental concerns.
ADVANTAGES TO ACCEPTING CRYPTOCURRENCY
Potential advantages to accepting cryptocurrencies include:
• Attracting new kinds of customers who view cryptocurrency transactions as being leading-edge and forward-thinking
• Retaining existing customers in rapidly changing technology markets who may already utilize cryptocurrency
• Attracting new types of capital markets made up of leading-edge and forward-thinking investors who may be attracted to companies using cryptocurrency
• Transforming the market’s perception of the company as futuristic, creative, and flexible
• Prompting creative thinking within the company’s management, including entering new customer markets or developing new innovative products