Corporate Cryptocurrencies: When To Expect A Surprising Contender To CBDC

It is something awaiting us right around the corner. Сorporate cryptocurrencies have not yet declared themselves loud enough, but many world-renowned companies are already engaging with the idea. Their emergence is now a matter of time and changes in legislation.

It has long been said that modern corporations have more power and authority than nation-states. The annual income of Apple or McDonald’s is significantly higher than the yearly budget of many countries. Therefore, it is no coincidence that for a long time, there have been concerns over a multinational corporation “buying” a small state, moving into its jurisdiction, opening a headquarters there, and establishing taxes and working standards itself.

Fortunately, the international community has all the necessary mechanisms to prevent this from happening. However, the global phenomenon of cryptocurrencies allows corporations to acquire one of the most important attributes of state independence – their own money. Moreover, if you analyze the information flow from the world of corporate finance over the past few years, you inevitably come to the conclusion that corporate cryptocurrencies are coming sooner rather than later. And those cryptocurrencies won’t rely on the unique capabilities of their blockchains, but the support of real functioning businesses.

On the other hand, it is hard to say to what extent they will be cryptocurrencies in the traditional sense, as decentralized systems. It is quite sensible for large companies to try and create tokens for their own ecosystems and use existing cryptocurrencies, especially those in the Top 10, to diversify investment portfolios (similar to how Tesla does it).

In fact, what is being described is a kind of tokenization, only not of a tangible asset, but a business that includes both tangible and intangible assets, the structure of the company, its potential, etc. Economically speaking, corporate tokens are similar to bearer shares – securities that can serve as a money surrogate. These days, bearer shares are no longer issued almost anywhere, and the very concept is a thing of the past. But back in the 19th century, they were often used in many countries as an alternative to cash.

But a share still implies the opportunity to receive a certain portion of the company’s profits. Corporate tokens currently being developed by many large multinational companies can instead be viewed as an analog of local currency. As such, they could potentially be used in settlements with clients and potentially even with counterparties.

For example, the rumors of Amazon cryptocurrency have been circulating for quite a while now. This is the exact case when introducing a surrogate currency into a large company’s ecosystem could be greatly beneficial. To do it, Amazon would need to accustom people to pay for purchases in their cryptocurrency. At first – by giving customers discounts for using its corporate tokens, and then by cooperating with other companies, which could also benefit from accepting Amazon tokens as payment.

The move would allow the company to avoid conversion losses in international settlements between its divisions, flexibly form prices for goods and services, and even dictate its terms to third-party suppliers.

Retailers now tend to give customers points for purchases, but they could replace the point system with something more versatile by creating their own cryptocurrency. And overall, company currency makes it much easier and more profitable to run your own marketplace.

The media have reported on multiple occasions that Apple, Amazon, Walmart, and other business giants had hired specialists in cryptocurrency and digital money. Quite recently, on August 15, the largest US retailer Walmart announced a job opening on its LinkedIn profile for “Digital Currency and Cryptocurrency Product Lead”. Based on the job description, the person will need to develop a “digital currency strategy and product roadmap”. The specialist will also be responsible for cryptocurrency-related deals. The kind of products the future Walmart employee is supposed to launch is not specified in the announcement.

The vacancy appeared just weeks after Amazon, one of the world’s largest e-commerce players, had opened its search for a leading digital currency and blockchain product specialist. The job description for a potential employee mirrors that of Walmart. Among the required skills for a candidate, Amazon mentioned “the ability to thrive in an uncertain and ever-changing environment”. According to a London-based newspaper City A.M.’s source, the corporation’s ambitions go beyond just adopting cryptocurrency: the online retailer is set to create its own token in 2022.

Another party searching for a senior digital currency and innovation manager is the British bank Lloyds Banking Group. As their mid-August announcement states, the company is looking for a cryptocurrency and blockchain expert to work on the bank’s new projects.

The first major player to post a job opening of that kind, however, was Apple at the end of June. Among the key requirements for the manager position for the development of “alternative payments”, the corporation listed five years of experience working with digital wallets, players in the Buy now, pay later (BNPL) segment, fast payment services, cryptocurrencies, etc.

One important point to underscore: Corporate coins will only succeed if they also have the qualities of stablecoins – that is, the corporation will guarantee a fixed exchange rate for fiat money at any time. Otherwise, experimenting with company tokens might prove too risky.

Of course, nation-states will strongly oppose the emergence of corporate cryptocurrencies. The question is whether they have the power to stop this process. As it stands, the world is seemingly moving towards international businesses becoming independent of states and their money, be it the dollar, the euro, or the ruble. Why would Amazon, for example, receive payment in different currencies if the company can make its own Amazon Coin and deal in it while also receiving seigniorage revenue?