Cryptocurrencies are redefining the entire payment infrastructure, says a new report from multinational Citibank. It added that digital assets have expanded from being merely an “internet novelty” to becoming a two-trillion-dollar market.
What Can Organizations Do to Embrace Crypto?
The report offers a blueprint for organizations considering adopting cryptocurrency payments or simply investing in such assets as a store of value, outlining three key aspects they should consider:
- The accounting team should have the correct tools to deal with cryptocurrencies
- Selecting which digital assets will be accepted as payment
- And whether or not the organization will hold crypto on its balance sheet
“Cryptocurrencies have evolved from being an obscure internet novelty to reaching a two trillion dollar market cap. Whether or not cryptocurrency disrupts the payment system as we know it, it has sparked new thinking in payment infrastructure, processing, and accounting, in addition to its increasing adoption as a store of value,” Citi’s report reads.
Challenges of Embracing Crypto
Citi also offers two approaches for receiving crypto payments. One is through the Agent Model, which means finding a third party to collect and hold their digital assets. The other way is through the Direct model, in which organizations hold and control their private keys with their own wallets.
Yet one of the biggest challenges for institutions is managing price volatility.
“When accepting crypto, an organization is likely to want to fix the price back into their functional currency. As a result, the price flexes in crypto rather than fiat currency. While this provides the organization a tool to manage price risk, the real price risk sits with the crypto remitter, which is typically an organization’s client or customer.”
This report is the latest from Citibank analysts. Back in March, the division issued a 100-page report dubbed “Bitcoin, at the Tipping Point,” in which the team noted that Bitcoin could become the “currency of choice for international trade” as the crypto market saw massive interest from financial institutions.
Citigroup, the parent company of Citibank, is also awaiting regulatory approval to trade BTC futures. As CryptoPotato reported, an anonymous source revealed the multinational giant is hoping to receive regulatory approval to trade Bitcoin futures on the Chicago Mercantile Exchange (CME).
Featured Image Courtesy of Citi