1. Home
  2. Cash & Liquidity Management
  3. Cash & Liquidity Mngm in North America

Stablecoins in treasury? WonderFi takes the plunge

Decentralised finance firm WonderFi Technologies has announced that it will be using US dollar-denominated stablecoins in its treasury management strategy.

Stablecoins are digital currencies backed by fiat currency, which the company says provide significant benefits including streamlining cash management, enabling the entering and exiting of crypto investments seamlessly, and providing the ability to obtain long-term value on corporate balance sheets by earning yield on idle assets.

"Stablecoins are the future of treasury management for companies in all industries and of all sizes," commented Ben Samaroo, CEO of WonderFi. "The use of stablecoins in our treasury management allows us to earn much higher yields on our unused working capital and cash reserves, than we would through a bank. This allows us to optimise performance of cash on our balance sheet without increasing volatility."

The WonderFi strategy

WonderFi intends to utilise certain stablecoins including USDC and DAI, and the company will review performance, risks and new developments in the area on an ongoing basis to continue to optimise its treasury management.

The company also announced that its common shares listed in the United States under the symbol "WONDF" are now eligible for electronic clearing and settlement through the Depository Trust Company (DTC) in the US.

The DTC is a subsidiary of the Depository Trust & Clearing Corporation that manages the electronic clearing and settlement of publicly traded companies in the United States. Securities that are eligible to be electronically cleared and settled through DTC are considered to be 'DTC eligible'. The electronic method of clearing securities through the DTC allows for cost-effective clearing and guaranteed settlement, simplifying and accelerating the settlement process for investors trading the company's shares.

Regulatory intervention incoming?

Despite the positive statement from WonderFi, the stablecoin market appears to be attracting the eye of regulators as they try and get a grip of the variety of crypto and digital assets that are offering some firms an alternative to traditional cash.

In its meeting at the end of July, and reflecting on the strain on liquidity felt at the beginning of the COVID-19 pandemic in March 2020, the Federal Reserve's Federal Open Market Committee noted that: "new financial arrangements such as stablecoins appeared to have the same structural maturity and liquidity transformation vulnerabilities [as prime money funds] but with less transparency and an under-developed regulatory framework."

Treasurers looking at whether to dip their toe into the 'Wild West' of crypto currencies will need to weigh up the positives that WonderFi clearly find in stablecoins together with the dim view that regulators seem to be taking of that world.

Like this item? Get our Weekly Update newsletter. Subscribe today

Also see

Add a comment

New comment submissions are moderated.