Why companies hold crypto
It's simultaneously opaque, uncomplicated, and changing as we speak.
In my last essay, I answered the question: how do companies hold crypto? Now, we’re going to tackle the why. This sequence may seem backwards, but there’s a reason. The how is often what people encounter first. Wallets, keys, custody, security, infrastructure — these are the concrete things companies need to figure out before they can do anything useful with digital assets. The why has more to unpack. It is simultaneously difficult to understand and uncomplicated. And the answer is in the process of changing.
The crude answer to “why do companies hold crypto?” is: because they believe it has financial upside. At least, this has been the story for much of the last decade. Companies, funds, and foundations held crypto primarily because they believed the assets would appreciate. Even when there were practical reasons to hold it — for example, needing native tokens to participate in a blockchain ecosystem or operate within a network — the underlying hope was the same: “token go up.” In bull markets, this seemed pretty smart (like when Bitcoin crossed $100,000 for the first time in December 2024).
Of course, though, companies do not only hold crypto. They strive to use crypto to their advantage, in light of their own risk profiles and financial objectives. This involves not only holding crypto, but buying it, selling it, and generally executing financial strategies with it.
The market evolved to meet this fundamental drive. Around 2020, during what became known as “DeFi Summer,” a new set of protocols and projects made it possible to do more with crypto than simply buy it and wait. DeFi, or decentralized finance, made it possible for users to lend, borrow, trade, provide liquidity, use assets as collateral, and earn yield. Some of these new projects were novel and clever, and some of them were houses of cards. But the important point is that crypto became not only something to hold, but an asset with which novel financial strategies could be executed.
What’s more, all of these strategies that an organization can pursue for itself can also be delivered as products for users. Folks like you and me. As a result, all sorts of companies and service providers, from centralized exchanges like Coinbase and Kraken to wallets, apps, brokers, custodians, and DeFi platforms, have sprung up to help users buy, sell, hold, stake, swap, trade, lend, and borrow crypto in service of personal financial goals.
And so till now, “crypto as financial strategy” has been the dominant use case and business model of the industry. Companies have held crypto, traded crypto, built products around crypto, and earned fees from helping people access crypto markets.
But why has crypto been understood primarily as a financial strategy? What are crypto assets, really? Let’s take a step back.
Cryptocurrencies — in their most fundamental form — are tokens issued by, or on top of, blockchain networks. And what are blockchain networks? They are protocols designed by developers, cryptographers, researchers, companies, or foundations who believe they have found a better way to coordinate economic activity online. This one is faster. That one is cheaper. This one provides more privacy. That one has better programming standards. And on and on.
No one can exactly say what makes “token go up” (though obviously some people have gotten very rich by guessing well), but it’s some combination of perceived utility, adoption, liquidity, scarcity, incentives, market structure, market making, narrative, and general vibes. As I’ve written before, this dynamic causes blockchain ecosystems to behave more like land than tech. Each network claims to offer better terrain, and people then speculate on what kind of economic activity might eventually develop there.
In this sense, cryptocurrency can represent a kind of bet on the future economic potential of a blockchain network. Will developers build here? Will users come here? Will liquidity accumulate here? This speculative dynamic has driven much of the “crypto as financial strategy” era.
Now enter: stablecoins.
Stablecoins were not invented yesterday, but in the last few years, thanks to infrastructure maturity and increased regulatory clarity, they have changed the center of gravity of the industry.
A stablecoin is a blockchain-based token designed to maintain a stable value, usually to fiat like the US dollar. Unlike typical cryptocurrencies, the point is not that the token should go up. The point is that it should remain stable enough to be used as money.
With stablecoins, the long-awaited promise of “crypto as utility” has begun to emerge, and rather quickly. Stablecoins are being used for payments, settlement, remittances, treasury movement, exchange liquidity, cross-border transactions, and other forms of value transfer. The company I work for, Fireblocks, processes over $200 billion in monthly stablecoin volume, and stablecoins now represent about 65% of the total transaction volume across the platform.
Stablecoins are designed to act like money that can move on blockchain rails. This does not make stablecoins magic, but it makes them extremely useful. In another piece, I wrote that stablecoins are like lightbulbs. What I meant is that stablecoins are the first obvious, visible, widely useful application of the underlying system. (The underlying system = blockchains, electricity; the application = stablecoins, lightbulbs).
Lightbulbs were not the only application of electricity, nor ultimately the most important. But they were the use case that made the underlying technology clearly useful. Stablecoins do something similar for blockchains.
So, going back to the title of the piece: why do companies hold crypto?
For much of the last decade, the answer was driven by financial upside: appreciation, speculation, yield, liquidity, and new products for users who wanted exposure to crypto markets. But that was only chapter one.
Increasingly, companies are not holding only “crypto” in the narrow sense. They are holding and moving blockchain-based representations of dollars, funds, deposits, and other forms of value. They are using these assets not merely as bets, but as operating infrastructure.
In my last essay, I said I would use “crypto” as shorthand for blockchain-based digital assets, for everyone’s sanity. But now we must leave that shorthand behind. (Don’t worry, we will remain mostly sane).
Crypto is not just crypto anymore. “Crypto” was only the first instantiation of a new way of digitizing monetary value. We are now talking about a much larger story — digital assets that can be issued, moved, settled, programmed, and exchanged on shared infrastructure.
That, I think, will be the subject of Part 3.