As companies of all sizes, from Tesla to small startups are looking to integrate cryptocurrencies into their investment portfolios, it’s no wonder that the average Joe is thinking how they can turn investing in crypto into a business.
The possible benefits of investing in crypto are alluring since there’s been a proven track record for high long-term returns.
Additionally, as a decentralized currency, it allows individuals and businesses to reduce costs and reach a broader international reach.
One thing for certain is that investing in Bitcoin and other crypto strictly as a business strategy can have challenges.
There is a fine line between investing for long-term growth and financial freedom, versus quick turn-around income.
You need to know the risks and weigh out the benefits before you can take on this exciting and sometimes technical journey.
In this post, we’ll go over all the important aspects to consider before investing in crypto as a business and give you the tools you need to get started.
Legal and Regulatory Considerations
Before putting your money anywhere, you must understand the rules and regulations for investing in crypto.
In the US, cryptocurrencies are regulated by different federal and state agencies.
The Securities and Exchange Commission (SEC) has a set of rules, while the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) have their own regulations in place.
The SEC regards crypto as a security and for this reason, implies securities law on them. A company or individual who is trading crypto must comply with registration requirements and disclosure agreements.
On the other hand, the CFTC views cryptocurrencies as a commodity. This allows crypto to be traded on regulated exchanges like any other commodity.
Finally, FinCen is the enforcement network that applies anti-money laundering and know-your-customer (KYC) requirements on crypto exchanges and any business that deals with cryptocurrencies.
Apart from these federal regulations and laws, each state has its own regulations.
For example, Wyoming has many favorable laws, encouraging crypto businesses to develop the blockchain. The state even recognizes crypto as legal property.
Compliance
Compliance with local regulations is very specific to where your crypto business is registered and functioning.
If you do not adhere to your state’s compliance rules, such as claiming your crypto taxes, you can be faced with major fines and even legal action.
Remember to…
- Understand the regulatory framework of both federal and state-level laws.
- Hire legal and compliance experts who specialize in crypto and blockchain technology to guide you.
- Stay informed and up-to-date with new rules, regulations, and standards.
Risks and Volatility of Investing in Crypto as a Business
Like any investment, Bitcoin and other cryptocurrencies come with their risks.
Being aware of these liabilities and knowing your comfort zone and tolerances will help guide you in your investing journey.
High Volatility
Crypto is notorious for being highly volatile. This can be looked at as either a blessing or a curse, depending on your outlook.
✅Pros: Volatility gives educated traders the chance to make big gains. Knowing when to sell high and buy low is a strategy that many traders look to by utilizing Bitcoin monthly returns graphs and stats to their advantage.
❌Cons: The market is unpredictable, and prices can plummet quickly. To successfully invest in crypto as a business, you need to dedicate your time to managing your portfolio.
Security Risks
Security is a major concern when it comes to investing in cryptocurrencies.
Remember, as crypto is decentralized it usually means that any transaction you make is irreversible. This leaves a larger margin for human error and makes it a prime target for hackers and online scammers.
In the first half of 2024, an estimated $1.38 billion of crypto has been stolen, doubling stats from last year.
As a business, you must prioritize the safety and security of your crypto assets by using reputable exchanges and cold hardware wallets.
Cold storage, which keeps your crypto assets offline is the most secure and effective way of preventing hacks.
Keeping updated on phishing scams and other common cyber scams also helps to keep your assets safe.
Investment Strategies
1. Diversification
Just like traditional finance portfolios, your crypto portfolio needs to be diversified.
Diversifying your crypto investments is needed to manage your risks and hedge against inflation.
As Bitcoin is often referred to as digital gold, BTC is usually the first choice for many investors.
Ethereum on the other hand, offers a wide variety of decentralized apps, smart contracts, and blockchain technology that can open you up to a whole new world of DeFi.
Altcoins are favorable for many investors and stablecoins, such as USTD and USDC are pegged to fiat currency and provide a stable value to your investments.
2. Long-Term Goals
Make sure to set long-term goals for your business investment. As crypto is volatile, investing in crypto as a business involves having a good strategy and clear objectives.
Regularly review and adjust your investment strategy as the market evolves and make sure to stay flexible as your business goals may alter.
3. Potential Advantages
- High Return Potential: Crypto, especially Bitcoin has proven to have a high return. Keeping crypto as a long-term investment is the best strategy when investing.
- Innovation and Adoption: Whether you are an individual who is trading crypto as your day job, or if you are an established business adopting digital currencies, it puts you at the forefront of innovation and opens the doors to a whole new platform that your competitors might not have.
4. Security
When it comes to safeguarding your Bitcoin investments, especially for businesses, security is vital.
Material Bitcoin offers a unique solution designed to provide enhanced security and peace of mind.
Material Bitcoin is a physical Bitcoin cold wallet. As it is completely offline it isn’t vulnerable to online threats such as hacking and phishing scams, like other wallets and exchanges are.
Apart from providing cold storage for your Bitcoin and private keys, Material Bitcoin also offers physical security.
The physical wallet is a stainless steel card that is tamper-proof. It cannot be damaged in fires or by water and ensures that your private keys and addresses cannot be destroyed.
Material Bitcoin: Benefits for Businesses
1. Cold Storage Security
- Keeps Bitcoin offline, preventing cyber attacks and scams.
2. Tamper-Proof Design
- Gives you peace of mind that your assets are secure, even in an emergency.
3. User-Friendly Interface
- Simple setup and usage process, especially handy for new investors.
- Gives businesses the ability to focus on their operations without worrying about their investment’s safety.
4. Backup and Recovery
- Material Bitcoin wallets will give you a secure seed phrase recovery.
- Use Material DIY to safely store your recovery phrase.
Real Examples of Turning Investing in Cryptocurrencies Into a Business
Tesla and MicroStrategy are two big-name companies that saw an opportunity to invest in the crypto market and have made substantial returns because of it.
In 2021, Elon Musk as the head of Tesla, purchased $1.5 Billion worth of Bitcoin. The company also accepts BTC as a payment method for its cars.
MicroStrategy is a business intelligence firm that embraced crypto early on.
CEO Michael Saylor invested billions in Bitcoin, making it a core part of its corporate strategy. The move was made as Saylor believes that fiat money can deflate due to inflation but Bitcoin holds up against it.
Individual Success
It’s not just big multinational companies that are gaining from investing in crypto. Individual investors have been able to turn it into a business for themselves.
Rachel Siegel
A former substitute teacher who was living paycheck to paycheck in New York back in 2017, saw an opportunity to invest small amounts of BTC after attending a crypto conference after-party. By 2022, her investments had grown and she was hitting the 7-figure range. She later began her own company called Crypto Finally.
Kane Ellis
Kane Ellis is a Bitcoin millionaire and made his fortune by mining Bitcoin instead of investing.
Ben McKenzie
A popular actor who made his fame on the hit show The O.C. has turned his love for crypto into a full-time job. He has written a book about crypto investing and even consults the FBI and Police agencies about crypto fraud.
Crypto Investments for Your Business Gain
The future of crypto investments as a business has demonstrated to have major benefits but also significant risks.
You need to be careful when investing and make sure that you are current and up to date on all market trends, regulations, and laws.
Adopting these strategies can provide you with a unique business opportunity within the world of digital assets that you never thought possible.
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