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Crypto Asset Management for Businesses [2024]
2024 is soon coming to an end after an eventful year which saw notable developments such as Ethereum's Dencun upgrade, the approval of Bitcoin ETFs, and Markets in Crypto-assets (MiCA) regulation coming into effect.
But one area that has seemingly gone under the radar is the increase of businesses (SMEs and corporates) investing into crypto, which has naturally coincided with more and more people using crypto asset management and solutions.
But whilst there has been an increase in mainstream businesses delving into crypto, there still remains a large majority who haven't; but who could be tempted if made aware of how manageable crypto asset management is with the right knowledge, software and strategies.
For this reason, this article will provide a digestible step-by-step overview of
- What is Crypto Asset Management?
- Assessing Your Business Needs Before Diving In
- Identifying and Leveraging Software for Effective Crypto Asset Management
- Identifying Optimal Cryptocurrencies or Strategies
- Monitoring Your Portfolio, Staying Informed, and Adjusting If Need Be
Let's dive right in!
What is Crypto Asset Management?
A good place to start for inexperienced businesses is to first understand what crypto asset management is, what it entails, and why it is an essential process for businesses wanting to enter into the world of cryptocurrency.
Put simply, crypto asset management is a structured and proactive approach that crypto investors use to buy, monitor, and optimise their holdings for the purpose of enhancing capital growth and liquidity and mitigating investment risks and market fluctuations.
Core elements of crypto asset management
At its core, crypto asset management incorporates several key components:
- Portfolio management: When a crypto investor, family officer or business (for example) invests into digital assets with a mid to long-term timeframe, they will have to do portfolio management. This is to ensure that financial goals are balanced alongside risk tolerance, whilst allowing for diversified exposure to multiple assets.
- Liquidity management: Another important part of crypto asset management is liquidity management, as this ensures enough crypto (normally held in stablecoins like USDC) is readily available to cover operational expenses; while having enough left over to allocate to long-term growth or hedging strategies.
- Risk management: Due to the crypto market's frequently volatile, crypto asset management often leverages tools like automated portfolio rebalancing, stop-loss orders, and multi-layered security (such as cold storage) to protect holdings.
Why crypto asset management is essential for businesses
Over the last few years, crypto asset management has become a critical tool for businesses aiming to stay competitive (and agile) in a crypto industry that is increasingly becoming more active and sophisticated.
Although crypto has many opportunities for growth, the space is also notoriously volatile. Yet it is actually this combination that can bring about many enticing opportunities for businesses, so long as a business is active with their investments. But due to a lack of know-how and time, businesses will often struggle to efficiently manage their long-term crypto holdings, so employing a tried and tested crypto asset management framework can help to make up for the lack of time and expertise.
Additionally, with increasing regulatory demands (as seen with MiCA), a robust asset management strategy helps businesses to remain compliant; while streamlining reporting and improving transparency.
Step 1: Assess Your Business Needs Before Diving In
The first thing you should do is to assess your business needs to determine a suitable course of action; as crypto asset management isn't a one size fits all process.
Evaluate your current financial structure
Start by examining how your existing financial assets are structured. Are you heavily reliant on traditional investment vehicles such as equities, bonds, or fiat currencies? If so, introducing crypto into your portfolio can provide diversification, offering the potential for high growth or hedging against inflation. Businesses that are overexposed to fiat currencies, particularly in high-inflation environments, might benefit from adding crypto as a hedge. However, businesses in stable economies may see crypto as an opportunity for long-term appreciation rather than a defensive asset.
Consider liquidity requirements
Every business needs liquidity to function, but not all need it at the same level. Are you a business that requires significant liquidity for short-term expenses, or do you have capital that can be tied up for longer periods?
For businesses with strong cash flow but limited avenues for immediate growth, allocating part of their capital to cryptocurrencies like Bitcoin or Ethereum could provide higher returns over time. However, if immediate liquidity is crucial, stablecoins like USDC could offer a way to engage with crypto while maintaining stability and quick access to funds.
Assess risk tolerance
Understanding your business's tolerance for risk is essential. Crypto can be volatile, but that doesn’t mean it’s unsuitable for risk-averse businesses. If your business has a lower risk appetite, stablecoins or staking strategies may align better with your financial goals, offering stability and predictable returns. For companies that can handle more volatility and want to aim for substantial growth, investing in a diversified portfolio of digital assets, including Bitcoin and altcoins, might make more sense.
Step 2: Identify and Leverage Software for Effective Crypto Asset Management
Once you’ve assessed your business’s specific crypto needs, the next step is to identify, select and leverage a crypto asset management software platform. These are more than just platforms for buying or selling crypto; and provide comprehensive tools to manage your portfolio, track performance, and ensure compliance. In some cases, they can even provide portfolio advise, and invest on your behalf.
When it comes to the European market, few solutions offer the same-level of service compared to the FCA and DNB-regulated ICONOMI platform.
ICONOMI — Europe's leading crypto asset management solution for businesses
For one, ICONOMI allows businesses to buy and sell cryptocurrencies at the best prices possible due to its connectivity with multiple global exchanges, and having seamless off-ramps so users can cash out to crypto-friendly banks. But ICONOMI offers much more than just buying and selling crypto, and also streamlines/automates every aspect of crypto asset management.
With access to over 150 cryptocurrencies, businesses can easily diversify their portfolios with a mix of well-established cryptocurrencies like Bitcoin, Ethereum and an array of different altcoins (including DeFi tokens). What's more, to ensure businesses are making data-driven investment decisions, ICONOMI provides user-friendly and real-time performance tracking and analytics functions. ICONOMI’s automated rebalancing also ensures that portfolios remain aligned with your business goals, reducing the need for constant monitoring.
What's more, ICONOMI offers built-in compliance tools like KYC (Know Your Customer) and AML (Anti-Money Laundering), which means that businesses are gaining exposure to crypto in a way that is compliant with regulations like MiCA.
But what really sets ICONOMI's crypto asset management offering apart is its Crypto Strategies feature, as this allows businesses to seamlessly build crypto portfolios by leveraging the expertise of top crypto investors; all without requiring in-house crypto specialisation.
Step 3: Identify Optimal Cryptocurrencies or Strategies
Once you are signed up to a crypto asset management platform like ICONOMI, the penultimate step is to identify optimal cryptocurrencies or strategies.
When it comes to selecting the right cryptocurrencies or strategies for your business needs, you have two main options — leveraging the external expertise of an asset manager or financial advisor, or leveraging a platform's copy trading functionalities.
On the one hand, working with an experienced crypto financial advisor can guide your portfolio decisions and, depending on the platform, have access to your crypto asset management software to make informed trades on your behalf (as seen with ICONOMI Wealth). This option can be particularly useful for businesses unfamiliar with crypto markets, and looking for hands-on, personalised advice relating to the best cryptocurrencies to invest in.
Alternatively, businesses can choose a more automated approach for choosing optimal investments, and ICONOMI’s Crypto Strategies facilitates this by allowing businesses to invest in the crypto portfolios of seasoned investors. But not all these strategies are the same in terms of growth and risk management, and what is great about ICONOMI is that these strategies often come along with a short description of the type of investing approach they are pursuing; and weekly/monthly updates regarding performance and any adjustments. This allows businesses to identify crypto investments that are most in line with their needs.
Step 4: Constantly Monitor Portfolio, Stay Informed, and Adjust If Need Be
After making a crypto portfolio via your financial advisor, or by investing in a Crypto Strategy, all that is left to do is constantly monitor your portfolio.
Crypto markets are known for their rapid fluctuations, which is why platforms like ICONOMI provide real-time performance tracking to help businesses stay on top of things. But monitoring your portfolio doesn’t just mean watching prices; it involves evaluating overall performance, liquidity levels, and any regulatory changes that may affect your holdings.
ICONOMI’s automated rebalancing and rules-based trading features are also invaluable in this regard. With features like stop-loss and take-profit rules, businesses can safeguard their portfolios by setting parameters that automatically adjust holdings based on market movements, freeing up time to focus on growth.
But staying informed about the latest crypto news and trends is just as important. This is because the crypto space is constantly releasing new innovations and tokens that have big investment potential. Businesses should consistently review their crypto strategy and adjust when necessary; whether that means reallocating assets, shifting risk tolerance, or copying new strategies.
Conclusion
And there you have it! By following four simple steps, your business can navigate crypto asset management effectively, and benefit from its advantages — from growth and risk mitigation, to improved liquidity and regulatory compliance.
As 2024 comes to a close, now is the time for businesses to act. By leveraging crypto asset management solutions like ICONOMI, you don't have to have a deep understanding of the crypto space, or have investing experience, as the platform has everything you need to build and manage a well-structured crypto portfolio.
Interested in opening an ICONOMI business account? Simply follow the instructions in this link, and start your crypto asset management journey today!
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