In the rapidly evolving landscape of web3 technology and decentralized finance, one critical challenge stands out for businesses: how to securely store and manage their crypto assets. Having spoken with over 200 web3 founders and CFOs, it's clear that this issue is a top financial concern for businesses that operate in the crypto space. In this article, we'll delve into the complexities of securing crypto assets for business use and explore potential solutions to this growing problem.
Crypto Assets: More Than Just Investments
Traditionally, securing crypto assets was straightforward — you could simply purchase a hardware wallet like Ledger and safeguard your investments. However, as businesses increasingly rely on crypto for daily operations, the dynamics change. Crypto is no longer just an investment; it has become a business currency, thanks to the advent of smart contracts.
Imagine running a traditional brick-and-mortar shop with the choice of either using an insecure cashier (centralized exchange or CEX) or a massive vault (cold wallets). The challenges of handling supplier payments, processing refunds, and meeting day-to-day financial needs are daunting. Unfortunately, there's no one-size-fits-all solution to this problem.
Challenges in Crypto Asset Management
Several options exist for managing crypto assets, but each has its drawbacks:
- Gnosis: While often used for its multisig and non-custodial features, Gnosis can be challenging to use, lacks support for multiple blockchains, and offers limited customer support.
- Ledger: Ledger devices are excellent for cold storage but are less effective for managing assets in a business environment.
- MPC Providers: Multi-Party Computation (MPC) providers offer strong security and efficiency, but they may lack practicality for regular cross-border payments.
- Crypto Banks: Crypto banks can be difficult to onboard, often come with high fees, and may offer a less-than-optimal user experience.
The Centralized Exchange Conundrum
Many web3 companies still choose to hold their revenues on centralized exchanges like Kraken or Binance. These exchanges offer unified crypto and fiat accounts, making on/off-ramping relatively easy. However, relying on omnibus accounts like those provided by centralized exchanges is no longer acceptable, as the recent FTX incident has demonstrated.
Businesses operating in the web3 space require more than just easy on/off ramping. They need flexible ramps, complete financial visibility, and secure business accounts for holding their assets.
The Path Forward: Making Crypto Accessible
Centralized exchanges were initially built with retail traders in mind, not businesses. Consequently, many business-oriented features are missing, such as:
- Segregation of crypto and fiat accounts
- Support for multiple blockchains and currencies
- Transaction categorization
- Invoice management
- Easy routing of payments to third parties
- Source of funds for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) compliance
- Transparent fee structures
- User roles for team financial operations
In conclusion, the key to securing crypto assets for business lies in making crypto seamlessly accessible and integrated into day-to-day operations. As the world of web3 finance continues to evolve, businesses must stay ahead of the curve, adopting innovative solutions that combine security, flexibility, and efficiency.
Navigating the complex landscape of crypto asset management is no small feat, but with the right tools and strategies, businesses can confidently embrace the future of finance powered by digital assets.
