TL; DR
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Unfortunately for today’s crypto space, companies are heavy incentivized to prevent cryptocurrencies from being held as assets, meaning this largely hasn’t happened yet.
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However, these incentives are about to be rebalanced! Starting next year, American companies that own cryptocurrency will be able to report their profits. also as their losses.
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This change could mean new money entering the crypto market billions.
Full story
To get. This:
In the 1950s, the average house cost $7,400, while the average price of a new car was $2,000.
And while it wasn’t as common as it is today, it wasn’t unheard of for households to have two or more cars.
That meant that in areas where real estate was more affordable, families would often spend more on their cars than on their homes.
(Nuts!) But of course…
In the decades that followed, real estate was reimagined and accepted by many as a financial asset, encouraging sustainable investments that kept prices high.
So what are we trying to achieve here? It is this:
What is stimulated is realized.
Unfortunately for the crypto space, companies are heavy incentivized to prevent cryptocurrencies from being held as assets, meaning this largely hasn’t happened yet.
Look, if a company currently buys (say) $10 million worth of Bitcoin → the total value drops to $2 million → and then shoots up to $50 million….
The company must report that $50 million in BTC as a value of $2 million.
This is because current tax rules say that if a company owns a bag of Bitcoin (or any other cryptocurrency), it must report it permanent lose every time BTC drops in price.
(Even if the company doesn’t ‘realize’ the loss and sells the Bitcoin).
On the other hand, if Bitcoin were to increase in price, then yes can not be reported.
…which means there is absolutely no incentive for publicly traded companies to own cryptocurrency.
“What, just so we can report our losses and hurt our stock price in the process? Why would we do that? everyone sign up for that??
That should be necessary disturbed.”
– Company managers probably.
The good news is: those incentives are about to be rebalanced!
Starting next year, American companies that own cryptocurrency will be able to report their profits. also as their losses.
Encouraging all corporate treasury managers open to holding cryptocurrencies on their balance sheets to jump in!
(Which could mean new money entering the crypto market through the billions).
