Operating Crypto Organisation - the unique challenge!

As one starts looking into the crypto project’s world, the segregation of solutions and challenges becomes quite apparent.

A lot has been accomplished in the last 7 years!

Blockchain is perhaps one of the fastest-growing areas of technology. With the rise of Ethereum and the ability to create applications beyond the use case of digital currency, there has been tremendous growth in the number of crypto projects.

The cryptocurrency market cap has grown from about $5B in 2015 to about $1T in October 2022. The number of wallets has grown from about 1.5M to 80M during the same period. And there are close to 8K crypto organisations today.

As blockchain technology moves towards its mass adoption stage rapidly, crypto companies grow in numbers and in scale with an ever-increasing global workforce and expanding operations.

Operating an organisation with a crypto treasury is no walk in the park! It is a balancing act of incorporating multiple providers for diverse needs while trying to minimise errors and resource wastage.

As one starts looking into the crypto project’s world, the segregation of solutions and challenges becomes quite apparent.

First and foremost, a crypto organisation needs to safeguard its assets. The choices today are between cold storage, HSM, centralised exchanges, smart contract wallets, multisig wallets, custodians, and MPC (one of the most secure technologies) to safeguard digital assets. Each offers varying flexibility, security, and regulation friendliness to execute.

With the bulk of the treasury secured, the focus turns to the operations. The projects need designated team members to securely authorise payments and transfers. Whether it is crypto payments to employees, vendors, or market-making, Multi-sigs have become quite popular amongst the crypto projects, DAOs, and organisations. Even though not the most secure or flexible, they allow teams to create a quorum of approved users to sign transactions and disperse risk.

Having said that, no crypto project can operate in a silo with a single currency or on a single chain. In fact, 88% of the total cryptocurrency market cap is distributed amongst 10 currencies. They need to swap assets across currencies and blockchains. Here is where the Exchanges (centralised and decentralised) and OTC desks come into the picture.

And this was one side of the coin.

Even though we have seen lightning growth of cryptocurrency in the last 5 years, the majority of the vendors still deal in Fiat and will continue to do so for a foreseeable future. A global workforce and operations mean that projects are required to deal with Fiat globally, making  traditional bank accounts and payment rails inevitable for operations. Hesitation from the traditional financial systems to accept crypto projects only adds to the complexity and challenges for the projects.

Needless to mention, each organisation has to manage its expenses and spends. For early-age projects, this might still be a manual task. However, as the operations expand, it becomes more and more cumbersome and time-consuming to continue as is. Having pre-approved expense limits and budgets not only brings control into the hands of the management but also decreases the time from approval to action for the team members.

Finally, with all these asset movements, the decision makers need to view and track its asset portfolio for effective and efficient decision making. Operating in a web of multiple blockchains, protocols, and currencies and in the absence of an agnostic solution, the teams must collect data manually from various sources and collate it in one place using sheets or on paper.

Present Day Scenario

Clearly, the finance operation of a crypto project is a task with tremendous overhead in the current scenario. The operations team is left managing multiple service providers to accomplish mundane tasks that often introduce avoidable errors costing an organisation time and money.

Traditional companies have had decades for development of effective and efficient support systems. In comparison, the blockchain universe has a very recent history. However, if we are to scale securely and firmly from here, the management & operations need to be simple and efficient and help bring the control into the hands of the decision-makers.

The CXOs and the finance teams of crypto companies, DAOs, and projects need to be able to focus on creating, not deal with the challenges behind operating a crypto organisation!

Written by
Shilpi Saksena