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Jim Tyson
Dive Brief:
- Half of CFOs plan next year to assess digital currencies for business use, with the volatility of such assets likely to persist as a top concern, the research firm Gartner said Tuesday, citing its global survey last month of 114 CFOs.
- The view of financial executives toward digital currencies seems to have warmed since February, when 84% of those polled by Gartner said that they did not plan to ever include bitcoin among their corporate assets.
- “Sentiment towards digital currencies appears to be improving among finance leaders,” according to Alexander Bant, chief of research in the Gartner finance practice. “As digital currencies mature and successful use cases materialize, finance leaders are looking at what their competitors are doing and whether it can be applied to their own organizations,” Bant said in a press release about the survey.
Dive Insight:
Cryptocurrency prices have see-sawed this year, pushed up by wider acceptance in business and finance and down by increasing scrutiny from regulators, including the Securities and Exchange Commission (SEC).
As bitcoin gained high-profile adoption by some organizations this year its price surged more than 90%, zig-zagging between $56,600 on Oct. 11 from $29,259 earlier on Jan. 1.
In the past several months businesses ranging from the big banks BNY Mellon and JPMorgan Chase to card giant Mastercard and automaker Tesla have said they will be involved in cryptocurrency markets to some degree. Tesla has purchased bitcoin outright.
SEC Chair Gary Gensler has repeatedly referred to the cryptocurrency market as the “Wild West” and, in remarks last month during a virtual event sponsored by the Washington Post, said he did not see cryptocurrencies remaining viable over the long term.
Citing investor vulnerability, Gensler said the cryptocurrency market needed oversight and called on trading and lending platforms to file with the SEC.
“I don’t think there’s long-term viability for five or six thousand private forms of money,” Gensler said. “So in the meantime I think it’s worthwhile to have an investor-protection regime placed around this.”
Some business leaders share Gensler’s concerns.
“I personally think that bitcoin is worthless,” JPMorgan Chase CEO Jamie Dimon said Monday at the annual Institute of International Finance membership meeting. “Our clients are adults, they disagree, that’s what makes markets, so if they want to have access to buy yourself Bitcoin, we can’t custody it but we can give them legitimate, as-clean-as-possible access.”
Dimon predicted that the cryptocurrency market will be regulated. “No matter what anyone in the room thinks, nor what any libertarian thinks, nor what anyone thinks about it, government’s going to regulate it.”
The volatility of digital currencies will likely remain the “key concern” of financial executives next year, Gartner said.
At the same time, inflation may increase the appeal of digital currencies, Bant said. “Some digital currencies may be seen as a viable hedge in an inflationary environment, and that in turn might lead many to consider taking payment in digital form.”
Digital currencies long-term may help reduce fraud, promote real-time, transparent reporting, increase accountability on corporate pledges of sustainability and enable faster, more accurate audits, Bant said.
Gartner surveyed 251 financial executives at companies spanning several industries and regions with annual revenue ranging from $500 million to $50 billion. Among the respondents were 114 CFOs.
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