Experts have analyzed that as global companies begin to incorporate Bitcoin (BTC) into their asset portfolios, BTC is becoming a key axis in reorganizing the global financial order beyond just a virtual asset. However, concerns were raised that BTC's decentralization could be threatened as corporate holdings and government-level strategic reserves increase. Concerns were also raised that if companies employ leverage strategies using BTC, it could become a source of instability in the financial market.
On the 6th, at the Bitcoin Finance Forum on the topic of 'Reorganizing Financial Order in the Decentralized Era' held at the Signiel Seoul in Songpa-gu, Seoul, a heated discussion took place about how BTC is reshaping the financial order.
The forum panelists formed a consensus that the convergence of decentralized finance and traditional finance is inevitable. Preston Pysh, partner at Ego de Capital, said, "Within the next 10 years, many companies will gradually adopt BTC as a core financial asset instead of cash and stocks," adding that "this is expected to drive corporate financial structure innovation and accelerate BTC adoption".
Pysh shared the case of Strategy, a company actively investing in BTC. He stated, "Strategy's Bitcoin liquidity, which was only $500 million in 2020, has grown to about $6 billion in five years, which is a result of 'leveraging' reinvestment of cash from traditional software business." He further added, "While companies have traditionally managed assets centered on long-term government bonds and stocks, they will now partially replace these with BTC to simultaneously hedge against inflation and preserve asset value".
Opinions were also raised that as BTC begins to be incorporated into traditional finance, its decentralization is being threatened. Pysh said, "Government reserves or corporate holding strategies for BTC are a threat to decentralization," adding, "It is uncertain how serious this threat is or whether we can control it".
He pointed out, "The problem is that companies are not legally obligated to prove their BTC holdings," and "While they may be audited, private companies are not required to disclose proof of holdings, so the community must continue to voice concerns about companies holding large amounts of BTC without proving it".
Moderator Stefan Rivera also presented a perspective that security risks could arise during proof of holdings. He said, "While overall, the trend is likely to move towards proof of reserves or wallet address disclosure, security issues definitely exist," adding, "If BTC-holding companies disclose their wallet addresses, both fund inflows and outflows will be revealed, and personal information such as investors' virtual asset wallet addresses could be exposed".
Concerns were also raised that if companies employ leverage strategies using BTC, it could act as a systemic instability factor. Joseph Chu, head of credit at Minwai, said, "Companies holding BTC all have different strategies," and "The accumulation of BTC in the balances of companies using leverage could act as a risk to the entire BTC system".
He warned, "When investors purchase BTC with a structure including call and put options, if these options cause price volatility, they may need to sell BTC, potentially causing large-scale selling," and "While not eternal, BTC is an asset with cycles, and Strategy has also been close to forced liquidation in the past." He added, "While using BTC as a long-term financial strategy by companies is positive, the structure of leveraging Bitcoin purchases based on fiat currency is making the system more vulnerable".
- Reporter Shin Jung-seop
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