KPMG adds cryptocurrency to corporate treasury
KPMG Canada has for the first time made a direct investment in cryptoassets, completing an allocation that includes Bitcoin and Ethereum, as well as carbon offsets to align with its ESG commitments.
The Toronto-based accounting and consulting firm created a governance committee to complete a thorough risk assessment prior to the asset allocation. KPMG used Gemini Trust Company’s execution and custody services to buy the assets.
"Cryptoassets are a maturing asset class," said Benjie Thomas, managing partner, advisory services, KPMG Canada. "Investors such as hedge funds and family offices to large insurers and pension funds are increasingly gaining exposure to cryptoassets, and traditional financial services such as banks, financial advisors, and brokerages are exploring offering products and services involving cryptoassets.
“This investment reflects our belief that institutional adoption of cryptoassets and blockchain technology will continue to grow and become a regular part of the asset mix," he added.
Since reaching a peak market value of nearly $3 trillion last fall, Bitcoin’s prices have crashed – wiping out approximately $1.3 trillion in market capitalization. KPMG could simply be buying the dip in the notoriously volatile asset class, which regularly has huge price fluctuations unmoored from fundamentals.
Though more and more legitimate entities are buying into crypto, Nobel Prize-winning economist Paul Krugman remains skeptical. In an opinion piece last month in The New York Times he compared crypto to the subprime mortgage products that triggered the Great Recession. Though crypto does not have the scale to trigger an overall economic crisis, its risks appear to be falling disproportionately on investors less able to handle the downside – just like subprime mortgages 15 years ago. According to research from NORC at the University of Chicago, 44% of crypto investors are non-white and 55% lack a college degree.
Krugman has stated before that crypto lacks viable use cases outside of facilitating money laundering, criminal transactions, and tax evasion. He, alongside numerous other leading economists, view the crypto market as a bubble in which people are buying in simply because other people have made money off that asset before.
Krugman says it’s fine for investors to bet against the skeptics, but they should be able to bear the risks. “These investors should be people who are both well equipped to make that judgment and financially secure enough to bear the losses if it turns out that the skeptics are right,” he notes in the New York Times opinion piece.
KPMG Canada will, of course, be fine if its crypto bets are off the mark.
