Written by Erik Weijers a month ago

What's stopping institutions from buying Bitcoin?

When publicly traded software company MicroStrategy started buying Bitcoin in 2020, more companies were expected to follow suit. Tesla quickly followed, but after that it remained relatively quiet. Now that businesses and investors no doubt understand Bitcoin better than they did two years ago, the question is, what's holding them back?

MicroStrategy CEO Michael Saylor is an unwavering educator and inspiration for understanding Bitcoin's usefulness. He has already hosted two well-attended online conferences Bitcoin for Corporations on behalf of his company. In a recent interview he discusses the question of what is still holding back institutions at the moment. He lists a series of reasons. If these barriers are removed in the coming years, we'll see more institutional interest, Saylor expects.

  • Clear accountancy rules: there is a lack of clarity about how corporate accountants should record digital assets. As long as that uncertainty continues, it is unlikely that a massive influx will start. In the United States, the FASB accountancy organization is working on a project to draw up rules for this. This standard will probably be introduced in 2023.
  • The arrival of a spot Bitcoin ETF: As is well known, in the United States the SEC has been blocking an ETF based on the market price (spot price) of Bitcoin for years. Grayscale's proposal to convert their trust to an ETF was recently turned down. Sooner or later, however, such an ETF is expected. That makes Bitcoin an easier and more legitimate investment for many parties. From an accountant's perspective, an investment in an ETF is easier to put in the books.
  • Regulatory cooperation of financial watchdogs SEC and CFTC. It must be crystal clear to institutions by whom they are regulated on which aspect of their accounting.
  • A larger number of reputable banks that offer crypto: more and more reputable banks will offer the possibility to custody your Bitcoin or stablecoins. That makes it more accessible for companies. They won't be switching banks anytime soon, so they have to wait for their bank to offer this service.

Conclusion

According to Michael Saylor, this series of behind-the-scenes processes will bring institutional adoption closer. We will hopefully be able to tick them off one after the other. Saylor probably has a good insight in these matters, as he has contact with many CEOs and CFOs. He knows their hesitations.

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