How Businesses Can Put Bitcoin on Their Balance Sheet: Exploring Multi-Sig Collaborative Custody, Bitcoin ETFs, and MicroStrategy Shares
As Bitcoin continues to gain traction as a financial asset, more businesses are exploring ways to integrate it into their balance sheets. Whether as a hedge against inflation, a diversification tool, or a strategic long-term investment, adding Bitcoin can provide numerous financial benefits. But for many businesses, the question is: how do you actually put Bitcoin on your balance sheet?
In this post, we explore three primary options for businesses looking to adopt Bitcoin into their financial strategy: multi-signature (multi-sig) collaborative custody, Bitcoin ETFs, and investing in MicroStrategy shares.
1. Multi-Signature Collaborative Custody: Direct Bitcoin Ownership with Enhanced Security
For businesses that want to directly hold Bitcoin as an asset, multi-signature collaborative custody is one of the most secure options. Multi-sig wallets require multiple private keys to authorize a Bitcoin transaction, distributing control across several parties, which significantly reduces the risk of theft or unauthorized access.
How Multi-Sig Works for Businesses
In a multi-sig setup, a business might use a 2-of-3 or 3-of-5 key structure, where two or three keyholders are required to approve any transaction. The business holds some of the keys, while trusted third parties (such as financial institutions or custodians) hold the remaining keys. This ensures that no single party can move the funds, providing an extra layer of security.
Benefits of Multi-Sig Custody
Enhanced Security: Multiple approvals are needed for transactions, reducing the risk of internal fraud or theft.
Disaster Recovery: If one key is lost, the remaining keyholders can recover the Bitcoin, protecting the business from total loss.
Decentralized Control: With multiple signatories, businesses can implement governance structures that align with their internal approval processes.
This approach is ideal for businesses that want full ownership and control over their Bitcoin but need robust security measures in place. It also allows for easy audit trails, which is essential for compliance with accounting and regulatory standards.
2. Australian Bitcoin ETFs: An Indirect Exposure to Bitcoin
For businesses that prefer not to hold Bitcoin directly, Bitcoin Exchange-Traded Funds (ETFs) are an attractive option. In Australia, Bitcoin ETFs allow businesses to gain exposure to Bitcoin without the complexities of direct ownership or custody.
What Is a Bitcoin ETF?
A Bitcoin ETF tracks the price of Bitcoin, allowing businesses to invest in Bitcoin through traditional financial markets. These funds are traded on stock exchanges, just like shares of a company. The ETF provider typically holds Bitcoin on behalf of investors, with the fund's value moving in line with the price of Bitcoin.
Benefits of Australian Bitcoin ETFs
Regulatory Compliance: Bitcoin ETFs are fully regulated by Australian financial authorities, providing businesses with a straightforward and compliant way to gain Bitcoin exposure.
Ease of Use: Businesses don’t have to worry about securing or storing Bitcoin themselves—everything is managed by the ETF provider.
Liquidity: Bitcoin ETFs are traded on traditional exchanges, offering liquidity and ease of entry/exit without the need for setting up complex Bitcoin wallets.
Investing in a Bitcoin ETF is ideal for businesses that want exposure to Bitcoin’s price movements but don’t want the complexities or risks associated with direct ownership and custody. It's also a great option for businesses that need to maintain compliance with Australian regulations but still want to explore the benefits of digital assets.
3. MicroStrategy Shares: Indirect Exposure Through a Bitcoin-Heavy Company
Another option for businesses seeking indirect exposure to Bitcoin is investing in companies that hold significant amounts of Bitcoin on their balance sheets—MicroStrategy being a prime example. MicroStrategy, a US-based business intelligence company, has become famous for its substantial Bitcoin holdings, effectively making its stock a proxy for Bitcoin.
Why Invest in MicroStrategy?
MicroStrategy has accumulated billions of dollars’ worth of Bitcoin, making it one of the most notable publicly traded companies tied to Bitcoin’s price movements. By investing in MicroStrategy shares, businesses can gain indirect exposure to Bitcoin, while also benefiting from the company’s core business operations in business intelligence software.
Benefits of Investing in MicroStrategy Shares
Indirect Exposure to Bitcoin: As MicroStrategy’s stock tends to follow Bitcoin’s price movements, investing in the company offers a way to gain Bitcoin exposure through traditional equity markets.
Diversification: By investing in MicroStrategy, businesses not only gain exposure to Bitcoin but also to a well-established company in the tech sector, providing an extra layer of diversification.
Easier Accounting: Holding shares of a publicly traded company is often simpler from an accounting perspective than directly holding Bitcoin, which may involve more complex reporting and compliance issues.
Investing in MicroStrategy shares can be a good option for businesses that want to hedge their exposure to Bitcoin without directly holding or managing the asset. It’s also ideal for companies looking for a hybrid approach that involves both Bitcoin exposure and traditional equity investment.
Which Option Is Right for Your Business?
Each of these methods offers distinct benefits, depending on your business’s financial goals, risk tolerance, and appetite for direct vs. indirect exposure to Bitcoin.
Direct Ownership with Multi-Sig Custody: Best for businesses that want full control over their Bitcoin holdings and are willing to invest in secure storage and governance solutions.
Australian Bitcoin ETFs: Ideal for businesses seeking Bitcoin exposure in a fully regulated, compliant, and easy-to-manage investment vehicle.
MicroStrategy Shares: Perfect for businesses wanting indirect exposure to Bitcoin through traditional equity markets, while benefiting from the diversification of a company involved in the tech industry.
Conclusion
As businesses increasingly recognize the strategic value of Bitcoin, more options are becoming available to integrate this digital asset into corporate balance sheets. Whether through direct ownership with multi-sig custody, indirect exposure via Australian Bitcoin ETFs, or investing in Bitcoin-heavy companies like MicroStrategy, businesses can find a solution that fits their needs and risk profile.
If you’re considering adding Bitcoin to your company’s balance sheet, Bitcoin on Balance can help you evaluate your options and provide tailored guidance on implementing the right solution for your business. Contact us today to learn more.