money Business isn’t waiting for regulations before investing in crypto
Big business isn’t waiting on Washington to regulate crypto. They’re already figuring out how to use crypto to improve operations — all within current laws.
“They’re saying how do we do this in bounds?” Rob Massey, partner and global tax leader at Deloitte & Touche, which advises businesses on how to comply with regulations, told Yahoo Finance. “There are demands coming from customers; the business wants to move forward, let's figure it out…They want to do this now.”
Their efforts come as Deloitte execs and their clients closely watch the outcome of President Joe Biden’s executive order on regulating crypto, the bipartisan proposal introduced this week by Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), and the various agencies’ reports on crypto that are due out this fall.
“We're hoping that we will have basically a regulatory framework that will position the United States as leaders in this industry for the globe,” said Tim Davis, Principal in Deloitte’s Risk and Financial Advisory.
The principals at Deloitte say companies they advise all see strategic and commercial opportunities with crypto. Companies are looking at NFTs in particular and examining them beyond just as financial digital assets and considering them as smart contracts that improve commercial activities using programmable money. Many corporations are also looking at NFTs as a bundle of rights.
“In a traditional world, we have contracts which govern the rights to IP. If someone uses or exploits IP (ex. uses a song) without the appropriate permission or remuneration, the owner of the rights must identify the violation and then take steps to resolve the situation and get paid. This normally includes the use of counsel,” Massey said. “With NFTs that govern IP rights, we could envision a world where tokens are used to access and pay for the use of the songs. These tokens then facilitate a near real time revenue split to all parties who have the rights to that song.”
In the financial industry, companies are looking at blockchain technology to settle trades faster and unlock capital and liquidity. It can take three days to settle trades on Wall Street, tying up capital locked up by counterparty risk.
“That whole industry is looking at how they can close that window to potentially settling trades within the same day,” Davis said. “That will create a significant amount of additional liquidity, de-risking and transparency into the markets that we just don't have today.”
Settling trades faster would increase the velocity of money so that funds could be moved quicker, allowing financial service firms to lower liabilities and risks.
“There's a lot of fear that gets held up, where you're in a trade where you have a position you can't get out of,” Davis said. “By just removing that, trillions of dollars that are held up in post- trade settlement processing, it will make the whole global economy much more efficient.”
With additional regulatory clarity, the execs at Deloitte believe more corporations will adopt crypto technology, which will lead to more retail adoption.They say it’s not just about using crypto as an investment.
“We should be talking about commercial activities happening differently with programmable money,” Massey said. “Once that is as normal, that’s when we really see people engaging. It's not for investment. It's just instead of having cash in your wallet, right?”
Jennifer Schonberger covers cryptocurrencies and policy for Yahoo Finance. Follow her at @Jenniferisms.
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