Crypto Treasury Management for Enterprises

In the digital age, as the adoption of cryptocurrency has become rampant, there is a growing need for businesses to understand and efficiently manage their crypto assets on their balance sheet. With the shift towards different types of businesses exploring and integrating digital assets as part of their daily operations, the need for effective crypto treasury management is clearer than ever.

Why is Crypto Treasury Management Critical?

The main challenges in crypto treasury revolve around effectively managing liquidity, funding, various risks, and adapting to new regulations as they evolve. Cryptocurrencies and the industry itself can be notoriously volatile. Thus, businesses need robust mechanisms in place to mitigate potential risks as much as possible. This is emphasized by events like the collapse of Terra, FTX, and Signature Bank, which underscored the significance of treasury and risk management.

Liquidity and Cash Flow

The primary goal of treasury management is to ensure all of the firm’s obligations are met when they are due. Cash flow forecasting and balance sheet asset allocation are crucial keys to maintaining optimal liquidity. It is also important to have sound knowledge of all aspects of fund movements, from crypto/ fiat deposit methods to trade expiries/ redemptions, and banking turnaround times for various currencies.

Funding and Cost Analyses

While maintaining sufficient liquidity, it is vital to focus on ways to monetise and utilize assets effectively with the aim of expanding the balance sheet and working capital. This could include capturing yield via staking or accessing tokenized TradFi products, or leveraging balance sheet assets to help out different parts of the business. At the same time, running operational and trade cost analyses to manage and minimize costs.

Risk Management and Diversification

Counterparty, liquidity, market, compliance, and reputational risks all need to be taken into account when making decisions on when, where, and how balance sheet assets should be allocated and utilized. It is essential to consider both the upside and downside risks during the decision-making process. Thorough research should be done on the counterparties you will be facing for credit risks, assess accessibility to trade in and out of different assets and withdrawal methods, and lastly, diversify your assets where possible to reduce concentration risks and prevent funds from being locked up.

How Zerocap can assist you in crypto treasury management

• Tailored Treasury Portal: Specially designed for treasury clients with built-in sophisticated reporting features to assist with reconciliation, auditing, and accounting.
• Seamless access to On/ Off-ramp + Fast Settlement: Manage your crypto/ FX exposures with ease via accessing our OTC desk with deep liquidity and same-day on/off-ramp settlement.
• Insured Custody + Multiple Addresses Management: Segregated crypto wallets with multi-layered security and insurance covered by Lloyd’s of London. Also having the ability to manage multiple wallet destinations via the treasury portal.
• Bespoke Balance Sheet Management Services: Acquire bespoke services to help your business increase capital efficiency while maintaining liquidity and boosting risk management.

At Zerocap, our team of digital asset specialists are here to help bridge the gap between fiat and cryptocurrency treasury management. To sum up treasury management in simple terms, it is essentially “to make sure the business operates as per BAU on a daily basis with no issues”. While there are a wide range of aspects to consider when managing crypto treasury, it is inevitable for a business to have strong treasury management in place in order to prosper. Robust treasury management will help the business grow considerably and be the “last ones standing” during a bear market or when major striking events are occurring within the space.

About Zerocap

Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets with industry-leading security, contact our team at [email protected] or visit our website www.zerocap.com

FAQs

Why is crypto treasury management becoming increasingly critical for businesses?

With the growing adoption of cryptocurrencies and their integration into daily business operations, effective crypto treasury management ensures that businesses can manage liquidity, handle various risks, and adapt to changing regulations, ensuring stability and growth.

What challenges do businesses face in crypto treasury management?

Businesses face challenges related to managing liquidity, funding, adapting to evolving regulations, and the inherent volatility of the cryptocurrency industry. Events like the collapse of certain banks and platforms highlight the need for robust risk management.

How does Zerocap assist businesses in crypto treasury management?

Zerocap offers a tailored treasury portal with advanced reporting features, seamless access to on/off-ramp with fast settlement, insured custody with multi-layered security, and bespoke balance sheet management services to enhance capital efficiency and risk management.

What is the primary goal of crypto treasury management?

The main objective of treasury management is to ensure that all of a firm’s obligations are met on time. This involves cash flow forecasting, asset allocation on the balance sheet, and having a comprehensive understanding of fund movements and banking turnaround times.

How can businesses mitigate risks associated with crypto treasury management?

Businesses can mitigate risks by diversifying their assets, conducting thorough research on counterparties for credit risks, assessing trade accessibility, and ensuring they have mechanisms in place to manage counterparty, liquidity, market, compliance, and reputational risks.

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