As a company that has been based on a blockchain infrastructure since its founding in 2013, Paystand has a unique lens into what’s going on in blockchain and crypto. Now, this provider of blockchain-enabled business-to-business (B2B) payments is showing its understanding of crypto in another way — by purchasing bitcoin and ether on its balance sheet.
“Companies are asking us more and more about what the role of crypto and blockchain is for their company,” Paystand CEO Jeremy Almond told PYMNTS. “So what we wanted to do with this announcement was describe a little bit about how Paystand thinks about it internally as a little bit of a leading indicator for how the most progressive CFOs can get ahead of where the world is going.”
Creating Capital Preservation
One thing that well-established, stable companies are trying to figure out is how what role crypto and blockchain technologies can play in capital preservation. Almond said Paystand put crypto on its balance sheet as a portion of its asset allocation to hedge against inflation, which is running north of 6% year over year.
“You’ve got to think about that, as treasury, and so one of the things the most modern companies are doing is hedging with high-growth, high-risk-adjusted assets like crypto,” Almond said.
He noted that these assets can be volatile in the short term, but that crypto has grown 36% over the last six months, 170% over the last year and 600% over the last three years.
“So, if you think about that relative to just holding cash, if you have a risk-adjusted asset in a small percentage — 1%, 5% — to balance out the capital loss from inflation, that’s actually trying to create a neutral perspective of treasury,” Almond said.
Looking at a New Form of Assets
Almond added that public companies are now allocating $75 billion of crypto on their combined ledgers.
“We’re not suggesting companies do it; it’s not investment advice,” Almond said. “What we’re doing is saying Paystand is someone who’s had a front-row seat for seven years, has been accumulating and so now we’re talking about it publicly.”
Almond said most companies are looking at 1% or 5% as a hedge against 5%, 6% or 7% inflation.
“Companies should be investing back in their own growth,” Almond said. “That should be the primary purpose of the company. But you also want to be ensuring that you’re not reducing your investible assets.”
Getting Smart About the What Crypto Can Do
Paystand chief financial officer Scott Bennion added that the company has crypto on its balance sheet for operational reasons — to run the blockchain — and to be ready to support customers who may have digital assets in the future.
For example, if a customer has crypto that they’re not doing anything with, it’s possible that Paystand could take it and provide a treasury product that would provide some sort of yield, said Bennion.
“We’re already a strong, trusted provider for our customers,” Bennion said. “The fact that we internally are working with the crypto means we’re getting smart about the things that we can do with the crypto and when the time comes, we’ll be ready to roll that out to our customer base.”
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