Plans to launch a Bitcoin workplace savings scheme have been revealed by pension and investment advisory firm Cartwright.
The eponymously named Cartwright Bitcoin Employee Benefits will enable employers to pay Bitcoin into wallets created for their staff.
Employees will be able to access the coins, with the provider offering staff training videos to explain how to use the scheme.
Cartwright is currently testing the technology and said that it has five companies waiting to sign up to offer the benefit.
Financial wellbeing risk
Asked about the financial wellbeing risks of encouraging employees to save in a single asset class that carries great volatility, Glenn Cameron, head of digital assets at Cartwright, said: “Staff can buy shares or ETFs that are leveraged, at any time. We explain to people this is a long term savings vehicle. This is money you are saving for a minimum of eight years – two bitcoin cycles. Putting in money on a monthly basis has not proven risky so far. Over 15 years anyone who has pound-cost-averaged monthly for more than a year has never been down.”
Cartwright is also considering offering Bitcoin as an equivalent to a restricted stock unit, as an incentive for key staff within unlisted companies.
“If you are an unlisted company you can’t give shares because you are illiquid. But you can do it with Bitcoin – we call them restricted bitcoin units, held in a [neutral third party] escrow account and the employee gets them after three years.”
Cameron added that the firm will champion Bitcoin as a means of doing cross-border payments and within corporate holdings, a strategy used by more than 10,000 companies in the US.
“On the cross-border payments side we are going to be able to give businesses the ability to send money around the world cheaper than with banks,” he said.
ESG questions
Asked about the potential ESG issues around Bitcoin, such as the high levels of energy needed to make them, he said: “The government and Bank of England hate the fact people may start to use Bitcoin rather than their currency. That is why we hear it is bad for the environment.
“KPMG and the Institute of Risk Management have published reports showing how it isn’t. It costs about $80,000 dollars to mine one Bitcoin at standard energy tariffs but you can buy one for $66,000. How do they do this? Because they buy cheap energy. No Bitcoin miners use grid energy – they use renewables – in fact they are subsidising the cost of the energy, by using energy that would have otherwise been wasted – 58 per cent is renewable energy and the sector will be carbon neutral by 2032.
“Another common challenge from trustees is that it is used by terrorists and criminals – But a UN report has shown that 5 percent of criminal transactions are in national currencies. In Bitcoin we know that it is 0.36 percent. We say that Bitcoin is the best ESG asset in the world.”
DB using Bitcoin
Plans for a Bitcoin workplace saving scheme were revealed as the firm said it has made the first defined benefit (DB) portfolio allocation to Bitcoin.
Cartwright’s yet to be named DB scheme is allocating 2 to 3 percent of its assets to Bitcoin, buying them today at a price of around $65,800.
The firm said its DB offer is the first time such a scheme has used Bitcoin.
Cameron said the allocation is being made after a lengthy consultation with the scheme’s trustees, which addressed questions around ESG, investment and security in depth.
Under an arrangement set up by Cartwright the private key for the scheme, the 256 character pin code that accesses the vault holding the Bitcoin, is split between five independent institutions.
Cameron said: “The logic is that it is an asymmetric investment opportunity. If you put in 2 percent, the maximum you can lose is 2 percent – if it goes to zero. But the upside is potentially significant. If you look at the correlations of bitcoin with 14 other asset classes, the 60-day correlation centres around zero. Investors need certain investment horizons, and it needs to fit within their risk appetite.”
Cameron believes Bitcoin is at the beginning of a two-decade long growth cycle, in part because of its scarcity.
He explained that the supply of gold increases by 2 percent a year whereas Bitcoin increases by just 0.83 percent. New Bitcoin supply halves every four years and will freeze when the number of Bitcoins reaches 21 million.
