Two weeks after bitcoin, and the broader crypto sector, tumbled to the lowest levels since last July and down more than 50% from all time highs in November sparking the latest avalanche of "bitcoin is dead" headlines, today the largest crypto token has soared over $44,000 - up more than $10,000 or 25% from its Jan 24 lows - pulling the rest of the crypto sector with it...
... following confirmation earlier in the day that Tesla still held on to its initial bitcoin purchase, which in a 10K filing earlier today it evaluated at nearly $2 billion as of Dec 31, and had not engaged in any new sales. But a far more powerful catalyst for today's spike is the latest development in institutional adoption, when the Canadian arm of accounting giant KPMG International announced that it has joined a growing list of companies adding crypto to corporate treasury accounts.
The Toronto-based company, which offers consulting, accounting, auditing and tax services, has added bitcoin and ether to its corporate treasury, as well as carbon offsets to maintain a net-zero carbon transaction to deliver on the firm's stated environmental, social and governance (ESG) commitments the company said Monday.
The assets were acquired through Gemini Trust Company’s execution and custody services. KPMG formed a governance committee to review the regulatory, reputational and custodial risks before approving the treasury allocation.
The company declined to disclose the amount of BTC and ETH purchased.
"Cryptoassets are a maturing asset class," says Benjie Thomas, Canadian Managing Partner, Advisory Services, KPMG in 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.
"The cryptoasset industry continues to grow and mature and it needs to be considered by financial services and institutional investors," says Kareem Sadek, Advisory Partner, Cryptoassets and Blockchain Services co-leader, KPMG in Canada.
"We've invested in a strong cryptoassets practice and we will continue to enhance and build on our capabilities across Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs) and the Metaverse, to name a few. We expect to see a lot of growth in these areas in the years to come," he added.
Sadek told Blockworks that the company is taking a “prudent” approach to the space and has so far only considered buying bitcoin and ether: “This is one of the many initiatives in the cryptoasset space that we’re looking at,” Sadek said. “KPMG in Canada is bullish on cryptoassets. We believe they are here to stay, and we’ll consider other innovative investment opportunities in the future.”
KPMG International, a global network of firms headquartered in the Netherlands, reported roughly $32 billion in revenue for its 2021 fiscal year. The latest crypto investment was made by KPMG in Canada.
Since Michael Saylor’s MicroStrategy added bitcoin to its balance sheet in the summer of 2020, dozens of companies have followed suit in what industry participants view as a growth area for the space.
And many more are coming: about 90% of institutions interested in crypto expect to allocate to the space by 2026, according to a recent Fidelity study.
KPMG Canada is now looking to enable institutional participation in Web3, Sadek told Blockworks, with a focus on the metaverse, NFTs and Decentralized Autonomous Organizations (DAOs). The firm offers crypto-related services when it comes to taxes, accounting and legal matters.
“Our DeFi workshops now include live demos of multiple applications, which inform how institutions can engage with applications and manage the associated risks,” Sadek said. “Being a multi-faceted professional services firm, we are uniquely positioned to engage with our clients in these workshops to share our insights that form the foundation of our support when helping in developing their strategy, roadmap and even proof-of-concepts.”
Elsewhere, the break above $44,000 could cause the current move to rise above the $45,000 level, according to Nathan Batchelor, lead Bitcoin analyst for SIMETRI Research.
“People are starting to feel a little more comfortable dipping their toes back into some of these riskier asset classes after the pullback,” Lindsey Bell, chief markets and money strategist at Ally Financial Inc., said. However, Bell says the market in general isn’t necessarily out of the water yet with lingering uncertainty on multiple fronts, including the speed at which the Federal Reserve and central banks could act to quell rising inflation.