Opinion Should Big Multinationals enter the Cryptocurrency Industry?

Should Big Multinationals enter the Cryptocurrency Industry?

March 24, 2018

Only a few years back, the idea of a big multinational corporation becoming involved in the crypto market in any role would have been preposterous. In many ways, the same was true not that long ago and around the start of 2017, just before the big breakout of the top digital currencies.

The rest of the year slightly changed that with the introduction of bitcoin futures financial products on the US markets and the decision of Japan to recognize BTC as legal tender. However, while this set the crypto markets on a roller-coaster that is still on its ride, the big corporations and especially multinational giants have not stepped into the domain.

Yet, could this be only a false perspective on a segment of the market that will soon completely blow up and see many corporations rushing into the crypto space? No one can tell beforehand, but it is possible to explore this issue and see whether or not these companies have any reason to consider this option in the first place.

Yahoo Japan

The Japanese branch of one of the biggest online companies in the world has recently made a big step into the crypto market, more precisely its exchange business. The information was released by an article in the Nikkei Asian Review. It stated that the company is planning to take a 40% piece in the BitARG Exchange Tokyo Company somewhere in April 2018. This purchase is planned to provide Yahoo Japan with a chance of creating their exchange using BitARG technology.

Right now, the hopes are that the same Yahoo crypto exchange should be operational some 12 months after that. The move is a savvy decision because BitARG Exchange Tokyo already has the approval of FSA or the Financial Service Agency of Japan. The entire deal will include the incorporation of another Yahoo asset, YJFX Company which will then be tasked with putting up the exchange with the use of proprietary tech.

Yet, the shadow of the recent hacks of the exchange CoinCheck still looms heavily over Japan’s corporate domain in regards to cryptocurrency development. That is why Binance is being summoned by FSA and its security protocols examined. Right now, one of the biggest exchanges is engaged in dialogue with the regulators and most hope it will be resolved without any tectonic tremors in the crypto market space.

Still, in spite of all of that, Yahoo Japan does not appear deterred. The plans for the same exchange continue with their development and the company seems poised to launch its really unique products somewhere in 2019.

A Signal to the Corporate World

Yahoo might be one of those tech companies which many have written off as a slain giant who is still stumbling around, but whose days are numbered. The company has been through thick and thin in the recent years, all supplemented with a steady dose of rumors which further impacted its chances for a big revival.

As a big provider of services like email, the company is still standing and it could be argued that precisely a venture like that would make a leap into the crypto unknown. More cynical voices would argue that Yahoo in any territory simply does not have anything to lose, so any bet, even a really bad one, is a welcomed option.

However, the experience of many other failed companies does not point this way. Instead, while no one could argue that this move is not risky, making a Yahoo crypto exchange still feels like something the company has hopes for.

Many in the digital currency community are undoubtedly hoping its example will be perceived as a signal to the rest of the corporate world. Unfortunately for them, there are strong arguments which state that the Yahoo Japan decision will not be something viable for the company.

The GPU Manufacturer Dilemma

The dilemma whether or not big companies should enter the crypto space is best described in the example of the GPU manufacturers. AMD, Nvidia, and all big companies have seen a boost in their sales during the recent 12 months or so.

This coincided with the rise of the altcoins and the sudden ability of individuals and mining pools to go after not just BTC, which is already used for everything from online betting to huge investment, but also other cryptocurrencies as well.

Yet, the manufacturers are unable to take a clear stance about these phenomena. They are not dismissing it completely but they are certainly not marketing their products to miners or suggesting it is the reason why people should buy it. This gray area is clearly very challenging for the companies who have seen a profit rise, but they are unsure if it will last. At the same time, they do not want to miss out on a good profit-creation opportunity that is not eSports or some of their regular markets.

The same is for any company that wants to get into crypto. A direct investment is a portfolio diversification, but the price might not hold. Making a service related to one or more cryptocurrencies is risky from a regulatory perspective, just like it is to create an exchange. Finally, physical mining is costly and potentially hardest to scale back if the process goes south.

Waiting for the Regulation

Are big multinationals and corporations aware of the potential of the cryptocurrency global market? They most definitely are. At the same time, are they worried about how the ecosystem of cryptocurrencies interacts with individual financial regulators of different nations? Absolutely.

This leaves them in a weird flux where there is no definite answer to the go/no-go question. This is why any big company in the tech domain wants to explore the possibilities of the crypto domain, but none want to risk big on it.

The setup would change quickly if the regulatory alignment can be made and at least place some cryptocurrencies into the full legal framework. Before this happens, we will not see a mass migration of big corporate capital into completely new cryptocurrency industry ventures.