MSCI Inc. says the risks from cryptocurrencies are steadily “creeping” into everyone’s portfolio.
According to an analysis by the New York-based finance company with a $50 billion market capitalization, at least 52 companies representing a $7.1 trillion market cap or 6.6% of the market cap have some exposure to crypto. According to MSCI ESG Research,
“While most cryptocurrencies are speculative investments with little evident utility, some have seen limited success as genuine currencies, and many have posted eye-popping returns.”
“This growth has contributed both to the rise of cryptocurrency-exposed companies and efforts by established companies to gain cryptocurrency exposure.”
This exposure ranges from Coinbase to companies holding BTC on their balance sheets like Tesla and MicroStrategy and to those who are entering into crypto. Also, it includes companies like Nvidia, the chipmaker with a dedicated GPU for crypto miners, and Facebook, which is exploring ways to monetize the system.
However, crypto exposure also brings challenges and risks with it, said Harlan Tufford, who leads MSCI’s North American corporate-governance research.
“Like, who in the company knows the passkey to access your private anonymous wallet that stores, you know, a billion dollars in Bitcoin? And how do you monitor that?”
Besides the environmental, social, and governance risks along with a lack of accounting standards, another challenge is the lack of crypto expertise among members of corporate boards of directors, said Tufford.
On searching the biographies of about 6,500 board members, MSCI found that only 79 people at 64 companies had references to crypto or blockchain.