KPMG’s Cryptocurrency Investment Details
In addition to the two biggest cryptocurrencies, also included are the requisite carbon offsets to keep a net-zero carbon transaction overall and, therefore, stay consistent regarding its own stated environmental, social and governance (ESG) commitments.
Benjie Thomas, Canadian Managing Partner, Advisory Services, KPMG in Canada commented crypto assets are a maturing asset class.
"Investors such as hedge funds and family offices to large insurers and pension funds are increasingly gaining exposure to crypto assets, and traditional financial services such as banks, financial advisors and brokerages are exploring offering products and services involving crypto assets,” Mr. Thomas said.
“This investment reflects our belief that institutional adoption of crypto assets and blockchain technology will continue to grow and become a regular part of the asset mix," he noted.
KPMG said it has created a governance committee to implement the extra care and approve the treasury allocation.
The committee included stakeholders from Finance, Risk Management, Advisory, Audit and Tax, and it conducted a very strict risk assessment process that incorporated regulatory analysis, as well as reputational and custodial risks.
This investment is seen as indicative of the company’s attitude related to emerging technologies supported by blockchain.
Kareem Sadek, partner, crypto assets, and blockchain Services co-leader at KPMG in Canada asserted the crypto asset industry continues to grow and mature and needs to be taken more seriously by financial services and institutional investors.
"We've invested in a strong crypto assets 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,” he said, and added they expect to see solid growth in these areas in the years to come.
Mechanics of KPMG’s Crypto Acquisition
KPMG in Canada acquired Bitcoin and Ethereum on its balance sheet through Gemini Trust Company LLC's execution and custody services and, therefore, joined a global craze of more ‘traditional’ investors adding crypto to their portfolios, including MicroStrategy, Square and even Tesla.
The company believes that cryptocurrencies will typically meet the definition of an indefinite-lived intangible asset because they do not convey specific rights in the same way as financial instruments.
“Indefinite-lived intangible assets are not amortized but are required to be recognized and measured at their historical cost; impairment is recognized when their carrying amount exceeds fair value,” the company said and added that the subsequent reversal of previously recognized impairment losses is prohibited.
The company, however, did not want to reveal the exact amount of the investment and indicated it is aware that owning digital assets as part of treasury can be risky due to high volatility in cryptocurrency prices.
Kunal Bhasin, blockchain co-lead at KPMG in Canada, said the firm is taking a “very prudent” approach in the investments.
“This is just part of the investments that we’re making overall as a firm in the crypto asset space, including our services and capabilities,” Bhasin confirmed.
After Bitcoin plunged by more than 35% from an all-time high set in early November, Tesla confirmed it has recorded $101 million worth of impairment losses in 2021 from its Bitcoin investment.
MicroStrategy on the other hand said it still plans to continue investing in Bitcoin despite recent declines in the value of the cryptocurrency.
What Does This Mean for Traders?
After the news emerged, Bitcoin managed to breach the $45,000 milestone for the first time in about one month. However, at the time of writing, it had dipped back below that mark, and was last trading around $43,787 per coin.
Notable support level which could represent buying opportunities are the 50% retracement level at $43,016, and he H4 period 21 Simple Moving Average (SMA) currently sitting at $42,177.