Why Canadian Corporations Should Consider Adding Bitcoin to Their Balance Sheet

In recent years, Bitcoin has transitioned from a niche digital asset to a serious consideration for institutional investors and corporations alike. As companies look for innovative ways to manage their treasury strategies, Bitcoin presents a compelling opportunity. Below are key reasons why forward-thinking corporations, including Canadian companies, might want to allocate a portion of their balance sheet to Bitcoin.

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‍Hedge Against Inflation

Traditional fiat currencies are subject to inflation, which erodes purchasing power over time. With central banks around the world engaging in quantitative easing and maintaining low-interest rates, the risk of inflation remains a concern.

In Canada, the inflation rate reached 8.1% in June 2022, the highest in nearly 40 years, due in part to rising energy and food costs. The purchasing power of the Canadian dollar has significantly declined over the past decade. Bitcoin’s capped supply of 21 million coins makes it a deflationary asset, offering a hedge against the devaluation of fiat currencies, including the Canadian dollar.

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‍Diversification of Treasury Holdings

Relying solely on traditional financial instruments, such as cash or government bonds, exposes corporations to certain risks. Bitcoin, as a non-correlated asset, provides diversification benefits. By including Bitcoin alongside traditional treasury assets, Canadian companies can better balance their portfolios against market fluctuations. Diversifying with Bitcoin can act as a buffer during times of economic uncertainty or when traditional assets underperform.

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Potential for Capital Appreciation

Bitcoin’s historical performance has demonstrated significant long-term appreciation despite periods of volatility. Early adopters of Bitcoin, such as MicroStrategy (MSTR) and Tesla (TSLA), have already seen substantial gains on their Bitcoin investments. In Canada, publicly listed companies such as WonderFi (TSX:WNDR) and Hut 8 (HUT) have leveraged their Bitcoin holdings as part of their financial strategies. While past performance is not indicative of future results, the potential for capital appreciation remains an attractive incentive.

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Enhanced Corporate Image

Embracing Bitcoin signals that a company is innovative, forward-thinking, and aligned with the digital economy’s evolution. This can be a strong differentiator in competitive markets and may attract tech-savvy investors, partners, and customers. Canadian companies that adopt Bitcoin could position themselves as leaders in the rapidly evolving fintech landscape.

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Access to a Global Digital Economy

Bitcoin operates on a decentralized network, making it borderless and accessible to anyone with an internet connection. Holding Bitcoin can facilitate faster and more cost-effective cross-border transactions compared to traditional banking methods, opening up new opportunities for international trade—a significant advantage for Canadian export-driven businesses.

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Liquidity and Security Improvements

The cryptocurrency market has matured significantly, offering deep liquidity and robust custody solutions for institutional investors. Companies can now securely store and manage their Bitcoin holdings through reputable custodians and wallet solutions. Canadian firms can benefit from local custody services and exchanges that comply with Canadian regulatory standards. If you are looking for regulated option to buy Bitcoin

Regulatory and Compliance Advancements

Regulatory clarity around digital assets is improving, with frameworks being developed to guide their adoption. In Canada, regulatory bodies such as the Canadian Securities Administrators (CSA) and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) are creating guidelines to ensure the responsible adoption of digital assets. As Bitcoin gains recognition as a legitimate asset class, Canadian companies can feel more confident about its integration into their financial strategies.

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Best Practices for Corporations Considering Bitcoin

1. Define Clear Investment Objectives: Establish whether Bitcoin is being acquired as a hedge, a speculative investment, or for operational use.
2. Engage Financial Advisors: Work with experienced advisors to determine an appropriate allocation and strategy.
3. Implement Secure Custody Solutions: Ensure the safekeeping of Bitcoin through trusted custodians and security protocols.
4. Monitor and Adjust Strategy: Continuously assess market conditions and adjust holdings as necessary.

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Looking to put Bitcoin on your balance sheet? Reach out to Bitbuy Corporate Solutions or Coinsquare Alpha for two options of regulated Canadian providers that you can help you on your Bitcoin journey.

Both firms have helped thousands of Canadian businesses work with Bitcoin, put Bitcoin on their balance sheet, and manage their Bitcoin treasuries. Both public and private, and companies of all sizes.

Disclaimer: Bitcoin.ca is owned and operated by WonderFi Technologies Inc. (TSX:WNDR), a publicly traded owner and operator of regulated crypto trading platforms Coinsquare and Bitbuy.

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