Many of us have noticed the recent proliferation of companies with a “Bitcoin Treasury policy”.
Your views on this may flow naturally from your view of Bitcoin: is it a superior currency, a store of value, a high-quality digital asset?
If so, then perhaps it makes sense for listed companies to allocate some of their surplus funds to Bitcoin.
However, what is less intuitive is that listed companies would raise money specifically for the purpose of buying Bitcoin rather than, say, investing in their core business.
That doesn’t sound like something that would happen in a normal market environment, with businesses raising funds in order to grow or expand. It sounds highly abnormal. Sort of like raising fresh equity in order to buy gold bars, or Swiss francs.
It sounds like something that would happen in a highly unusual market environment, and that’s what we’ve got right now.
For starters, the Bitcoin price is up over 70% against the pound over the past year:
With the 5-year return on bitcoin fast approaching 1000%, investors are understandably scrambling to get a piece of the action.
However, the FCA banned crypto-linked exchange-traded notes several years ago. They did this presumably with the intention to protect investors from excessive risk and losses.
In a sign of the times, the FCA is now proposing to lift this ban.
The executive director of payments and digital Finance is quoted as saying:
‘This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.’
Fair enough.
However, the FCA’s ban on exchange-traded crypto notes has clearly not prevented investors from getting their hands on crypto-linked stock market investments.
Step forward the Bitcoin Treasury companies. I'd like to profile three of the most interesting.
Smarter Web (OFEX:SWC)
- Exchange: Aquis
- Share price: 222p
- Shares outstanding: 265.6 million (18th July RNS), regularly increasing.
- Market cap: £589m based on a 265.6m share count.
It can be tricky to get a firm view on the market cap here, as the share count is regularly increasing. There is…
