When the state of Ohio partnered with cryptocurrency company BitPay last year, it meant the state would become the first in the U.S. to allow businesses to pay their corporate taxes in bitcoin. In an interview with CNBC at the time, Ohio’s then-State Treasurer Josh Mandel said the initiative would increase “options and ease” for businesses, and support the local tech startup community.
“We really want to roll out the red carpet, and welcome all sorts of blockchain companies to Ohio — not just in the cryptocurrency space, but in a variety of different use cases,” he said.
Ohio’s effort signaled a renewed push for corporate adoption of cryptocurrency. While B2B use cases of blockchain are plenty (and gaining greater traction in use cases such as trade finance and cross-border corporate payments), adoption of bitcoin and other cryptocurrencies themselves remains muted in the business community.
The Cambridge Centre for Alternative Finance released a study last year, finding a sharp increase in the onboarding of new cryptocurrency users, rising from 18 million at the end of 2017 to 35 million at the end of 2018, Invest in Blockchain reports said. However, the adoption curve is undoubtedly driven by consumers.
As a result, businesses have begun to accept crypto as a form of payment from their consumers. According to Good Audience, hundreds of thousands of retailers currently accept cryptocurrency. Yet, when it comes to companies using cryptocurrency for their own payment needs, adoption remains muted.
During the first tax season in which crypto payments were an option for Ohio companies, only two businesses in the state actually used cryptocurrency to do so. State Treasurer Robert Sprague spoke at the Ohio State Associated Press forum earlier this month, reports in Bitcoin Magazine said last week, where he offered new details on adoption of business crypto tax payments. These details included the fact that, so far, only two companies have used the OhioCrypto.com platform, through which companies can pay their business taxes in cryptocurrency.
“We’re reviewing how [the program] might either be curtailed or might be expanded, and what our counterparty risk is with that vendor,” he said, according to the publication.
Analysts have previously pointed to cryptocurrencies’ volatility risks as a key factor behind companies’ — especially small businesses’ — reluctance to adopt the tool. While there have been several B2B payment use cases for cryptocurrency (for example, using bitcoin to move funds across borders in a fiat-to-bitcoin-to-fiat conversion pattern), the opportunity for companies to pay vendors in cryptocurrency remains miniscule.
Some industry innovators are looking to drive change, however. Last year, blockchain company Stratis announced the launch of its Breeze Wallet, a solution that enables corporates to securely and privately make B2B payments in cryptocurrency. Earlier this year, reports from The Economic Times noted that some of India’s largest companies — including Hindustan Unilever, HDFC Bank, ABG Shipyard and Reliance Industries — are now experimenting with the use of cryptocurrency for intracompany transactions, as well as payments to their own subsidiaries and vendors.
“It will mainly be effective as a working capital management tool, where, rather than actually transferring money, cryptocurrency will be transferred, and accounts shall be reconciled at a later date,” one unnamed source explained to the publication at the time.
While blockchain has gradually gained traction in the enterprise world, cryptocurrency’s role with businesses is less certain. If Ohio’s corporate tax payment initiative is any sign, businesses may not yet be ready to use cryptocurrency to make their own payments.