The future of business accounting
In a previous post, we looked at some of the companies that have begun to add cryptocurrencies to their corporate treasuries.
As it becomes more normalized for companies to receive Bitcoin and other cryptocurrency as payment for their goods and services, to hold these digital assets as reserves or even to pay their employees in crypto, it is possible that businesses in future may develop financial strategies that seem wildly improbable to us now but which will be commonplace in future.
When Tesla sold a small proportion of its Bitcoin last month, some people saw this as a lack of confidence in the world’s first decentralized currency. However, the reverse is true: Elon Musk made the case that the sale of what was, after all, just 11 per cent of their total purchase simply proved Bitcoin’s value as a liquid asset that was as convenient as cash, but in this case better at holding its value.
To any observer of the Bitcoin ecosystem five years ago, before institutional money moved in and when cryptos were the preserve of enthusiasts and early adopters, these developments are nothing short of amazing. So let’s suspend our disbelief and make some wild predictions for 2026, which may or not come true.
While corporate regulations vary from country to country, it is common for companies to invest in stocks and bonds in order to diversify their assets or to generate better returns. As any crypto investor today knows, while the risks of experimental protocol are high, returns from decentralized protocols (DeFi) far outrun any that can be derived from traditional assets.
For the uninitiated, the world of DeFi, with its fast-moving memes, its outlandish returns and its ‘money Legos’ (so named because they slot together interchangeably to form complex structures, seems a scary place, a universe away from the staid rules and conventions of corporate finance.
However, for those prepared to look below the surface, it becomes clear that something more profound is happening than the anonymous developers working under meme-laden pseudonyms and the protocols named after food (SushiSwap, PancakeSwap, Tendies, Yams) would suggest. A true financial revolution is taking place, where smart contracts allow a coalition of the willing to buy, sell and lend to each other using financial instruments that mirror those in traditional finance (TradFi) — except that the transactions are all automated and there is not an intermediary in sight.
The returns reflect the risks of this rapidly evolving landscape. Some traders dream up complex sequential moves and risky assumptions that will net them a small fortune with no recourse to compensation if something goes wrong.
However, others simply prefer to put their money to work by committing it to a liquidity pool run by a smart contract, for which they are rewarded by governance tokens. In turn, these governance tokens can also be used to provide liquidity. Because rates change all the time, and liquidity providers move their tokens in and out of pools to where the return is greatest, this may be done programmatically. This process (yield farming) is starting to make tentative steps towards becoming mainstream for retail investors. Is it, therefore, so far-fetched to imagine that one day corporations will be putting their assets to work through yield farming or interacting with other DeFi protocols?
Assuming that this is the case, one of the challenges will be incorporating the records of this activity into standard accounting software.
Imagine the world where the corporations can easily transact with crypto in a fully compliant and easy way to get the benefits of this anti-inflationary, high-yield programmable asset class.
