More and more Bahamian companies are going to start placing Bitcoin on their balance sheets, according to a senior chartered accountant, who said despite the volatility cryptocurrency is an emerging asset in The Bahamas.
Kendrick Christie, who is also the president of the Association of Certified Fraud Examiners for The Bahamas and past president of the Bahamas Institute of Chartered Accountants, said there are many practical business problems cryptocurrencies like Bitcoin can solve for Bahamian companies, but they must put in the research to enter the market safely.
“If it sounds too good to be true it usually is. Research, we’ve got to. For us to be able to audit or test as internal auditors or executives in the business world, as crypto comes onto the balance sheet, I think some Bahamian companies are going to soon be looking at putting Bitcoin on their balance sheets or some sort of crypto. How do we account for that and all of the concerns that come along with that? We’ve got to research,” he said at a seminar on managing the risk of fraud in a challenging business environment, hosted by financial services company Citadel yesterday.
Digital assets are a new commodity in The Bahamas, however the government has stayed ahead of the trend by recently passing the Digital Assets and Registered Exchanges (DARE) Act, 2020 which regulates the issuance, sale and trade of digital assets within the jurisdiction.
Christie said though this new commodity can open a new market for The Bahamas, businesses must still consider the best alternatives to hedge against the risk of cryptocurrency volatility.
“It is a very volatile currency. Mind you the volatility of Bitcoin has been decreasing over the years in what we call Bitcoin dominance, Bitcoin being the grandfather of cryptocurrency and then you have altcoins,” he said.
“Of course you can lose a lot on the balance sheet. I think a lot of companies are going to hedge by investing and diversifying in other types of assets. You have gold, you have other types of stocks, there’s a correlation between the stock market and Bitcoin, there’s no correlation between gold and Bitcoin, so any good company is going to look at diversifying with other types of investments that perhaps will correlate to a low level with Bitcoin.
“There are products that are being offered now that offer some hedging ability into the future. What you can do as well is not only hold Bitcoin, but sell it at a higher price later on. There is a downside, we’re hoping that volatility declines over time, but any type of personality – especially Elon Musk – can send the market in a craze.”
Christie was referring to the surge in Bitcoin prices after Tesla – owned by tech entrepreneur Elon Musk – purchased $1.5 billion in Bitcoin earlier this year. Prices then dropped last month after the company stated it would no longer accept Bitcoin as payment to purchase its vehicles.
Christie said despite the ups and downs of the assets, cryptocurrencies are here to stay and Bahamian companies should explore ways of integrating it into their businesses.
“I think it could provide a token structure that could provide payment uses to compete with cash. The Sand Dollar, even though it is not a cryptocurrency – I commend the Central Bank for that – but I think we have room for ease of payments. For companies to go to the Family Islands, right here on New Providence and pay without using cash,” he said.
“As well, there can be a rewards system. Tokens can be given to employees, a company can contract with a token company to pay those employees with that particular token. There’s too much of a reliance on fiat cash and that is one of the biggest things that can happen in The Bahamas in the crypto world.”