Finding a Place for Cryptocurrency in Corporate Liquidity

Cryptocurrency is seeing a surge of renewed interest, potentially driven largely by recent U.S. policy shifts. This focus is prompting businesses to reconsider their approaches to managing liquidity.

High-level discussions and the proposed presidential advisory Crypto Council suggest a move toward a transparent regulatory framework. This could enable treasurers to view cryptocurrencies as a viable addition to their liquidity strategies.

With cryptocurrencies now returning to the forefront, companies must understand this revival and how they can use it to their advantage. To help financial professionals leverage crypto in their liquidity strategies, Kyriba SVP of Product Solutions & Strategy Thomas Gavaghan shared some critical insights into how to make this into a reality.

Crypto and Liquidity

Cryptocurrencies, once seen as speculative, are now being considered for their potential to enhance efficiency, reduce costs, and foster innovation in liquidity management. AI and big data have recently dominated financial technology discussions.

Yet Gavaghan believes that blockchain technology, the foundation of cryptocurrencies, is poised for a comeback in 2025. Its secure, efficient, and transparent nature positions it as a key enabler for faster cross-border payments, shorter settlement cycles, and enhanced liquidity visibility in treasury operations. Blockchain’s transparency can provide global, real-time tracking of transactions and balances, which enables better decision-making.

Cryptocurrencies are emerging as a potential tool in liquidity planning, as seen with companies like Tesla exploring crypto payments, offering new flexibility and aligning with digital transformation strategies.

Decentralized digital currencies simplify cross-border liquidity transfers, reducing reliance on traditional banking systems and lowering transaction costs. Blockchain’s cryptographic security enhances liquidity protection from fraud and unauthorized access. Faster settlement times and reduced fees associated with cryptocurrency transactions can optimize liquidity deployment and resource utilization.

Gavaghan adds that the broader economic context like trade tensions and their impact on currency valuations, may push treasurers toward diversifying holdings into alternative assets like cryptocurrencies.

Of course, cryptocurrency is not without its drawbacks. There is one significant barrier to broader cryptocurrency adoption – price volatility. in broader cryptocurrency adoption for liquidity management. It likely proposes that tools like hedging strategies and stablecoins offer practical solutions, allowing organizations to benefit from cryptocurrency’s advantages while mitigating excessive financial risk.

Tools of the Trade

Digital innovations like tokenization and smart contracts have been transformative forces in corporate finance. Tokenization, the representation of real-world assets (RWA) on blockchain, is being explored by businesses for assets like bonds, real estate, and commodities to improve liquidity access, reduce transaction costs, and increase transparency.

Additionally, Gavaghan adds that stablecoins can be powerful tools within treasury management. These digital assets pegged to fiat currencies offer price stability combined with blockchain’s efficiency, making them attractive for streamlining financial operations. Key applications include fast cross-border payments, more flexible liquidity management as an alternative to traditional cash pools, on-chain settlements for invoices and supplier payments, and hedging against currency fluctuations.

What This Means for SAPinsiders

Adopt a learning mentality CFOs and treasurers should prioritize understanding new crypto regulations, evaluating organizational readiness, and launching pilot programs to explore practical applications. Whether it is cryptocurrency or other blockchain technologies, finance teams should keep a healthy awareness of all emerging options that could be useful to them.

Leverage all the tools you can. With economic volatility showing no signs of slowing down, companies must ensure that they are aware of every turn and regulatory update. Companies must ensure that they are ready to use cryptocurrencies and other blockchain technologies to optimize liquidity.

Experience leads to understanding. Organizations that are not quite sure how to best leverage cryptocurrencies and other emerging technologies can turn to experienced partners like Kyriba. Learning from experts in the area can help them to grow their understanding and make better decisions that help companies meet their business goals.