Bitcoin in Corporate Treasury Management

By Niket Nishant and Bhanvi Satija

(Reuters) – U.S. President-elect Donald Trump's pro-crypto stance has encouraged small businesses to invest in bitcoin, as they seek better inflation hedges than traditional assets.

In recent weeks, biotech companies like Enlivex Therapeutics (NASDAQ:ENLV), Acurx Pharmaceuticals, and Hoth Therapeutics (NASDAQ:HOTH) have aimed to allocate up to $1 million in bitcoin for treasury reserves.

This trend highlights bitcoin's growing legitimacy among corporate treasurers, who view it as a robust alternative amidst economic uncertainty, geopolitical risks, and fiscal challenges affecting conventional assets like Treasuries and cash.

"The benefits of bitcoin as a treasury reserve asset are clear. Inject bitcoin into a company, and it can climb into the top 100 by market value," stated Samson Mow, CEO of crypto infrastructure firm JAN3.

As of August, corporations owned roughly 3.3% of the total bitcoin supply, marking a 30% year-over-year increase, according to a report by the bitcoin-focused financial services firm River.

Enlivex CEO Oren Hershkovitz emphasized that evaluating bitcoin as a strategic tool was already on their agenda prior to Trump's election, calling it a vital consideration given recent economic turbulence.

Bitcoin's popularity has surged, especially following endorsements from major institutions, and Trump's promise of a crypto-friendly administration further elevates its status. "The next four years should be promising for crypto," noted Acurx CEO David Luci.

Trump aims to establish the U.S. as the "crypto capital of the planet" and has pledged to form a council for industry policy endorsement.

However, skeptics highlight bitcoin's volatility risks, questioning its effectiveness as an inflation hedge. SEC Chair Gary Gensler labeled it speculative, despite approving spot bitcoin exchange-traded funds.

Critics are described as "unfair" by Henry Robinson, co-founder of crypto mining firm Decimal Digital Currency, who states that bitcoin is not uniquely volatile.

The Corporate Adoption of Bitcoin

MicroStrategy, the largest bitcoin holder among companies, set the trend in integrating bitcoin into treasury management back in 2020, significantly influencing its stock price in response to crypto market sentiment.

New adopters emphasize their focus on core business rather than becoming mere proxies for bitcoin. For instance, Enlivex's Hershkovitz stated, "We're a biotech company focused on developing clinical assets. My expertise lies in taking drugs from pre-clinical to approval."

Analysts suggest companies could monetize their bitcoin holdings through loans while leveraging their currency reserves as collateral. "Lending against crypto is common, and collateral is secure," said Decimal Digital's Robinson.

The excitement surrounding bitcoin may also enhance stock valuations, providing companies with leverage for share sales for capital needs. MicroStrategy's stock has surged over 31-fold since adopting bitcoin as its primary treasury reserve.

Brandon Mintz, CEO of Bitcoin Depot, which started investing in bitcoin in June, remarked that this strategy would make company balance sheets more appealing to the public.

MicroStrategy and Hoth did not immediately respond to requests for comment.