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What to Know:
- Méliuz, a Brazilian fintech firm, has adopted a bitcoin treasury strategy to escape a "treasury trap" where holding fiat currency was devaluing its assets.
- The company’s decision to invest in bitcoin was driven by the need to preserve its capital, as holding cash in government bonds was yielding negative returns due to high inflation and taxes.
- Méliuz’s approach to bitcoin investment is unique, using share issuance and derivatives to generate returns, rather than relying on debt financing, which is common in emerging markets like Brazil.
Brazilian fintech firm Méliuz has made a bold move to invest in bitcoin as a means of preserving its capital and escaping a "treasury trap". According to Diego Kolling, Head of Bitcoin Strategy at Méliuz, the company’s balance sheet review in late 2024 revealed that it was profitable, debt-free, and growing, yet its market value was essentially zero. This was largely due to the fact that its cash reserves, approximately R$250 million, were parked in government bonds, which were yielding negative returns after taxes and inflation.
Kolling explained that the company’s shareholders overwhelmingly supported the decision to adopt a bitcoin treasury strategy, with 66% of shareholders participating in the vote. Méliuz’s approach to bitcoin investment is distinct, as it leverages share issuance and derivatives to generate returns, rather than relying on debt financing. This strategy is particularly relevant in emerging markets like Brazil, where benchmark interest rates are high and private borrowing can be costly.
Méliuz has also been inspired by the approach of Japanese bitcoin treasury firm Metaplanet, which sells cash-secured puts to generate returns. The company now uses a similar strategy, selling options to earn yield on capital set aside for buying bitcoin. While Kolling did not disclose the size of these operations, he noted that the company is committed to a hard cap of around 20% of its bitcoin holdings being deployed in yield-generating strategies.
The motivation behind Méliuz’s decision to invest in bitcoin is clear: survival. As Kolling put it, "Bitcoin became the escape hatch when holding fiat meant melting our treasury faster than we could build it." The company’s move to bitcoin is not driven by speculation, but rather a desire to preserve its capital and ensure its long-term viability. With 80% of its bitcoin holdings stored in cold storage, Méliuz is taking a cautious approach to its bitcoin investment, while also exploring potential future expansion into other strategies, such as Lightning or bitcoin-backed debt.
In conclusion, Méliuz’s decision to invest in bitcoin is a significant development in the world of fintech and cryptocurrency. As a publicly traded company, Méliuz’s move to bitcoin is a testament to the growing recognition of the asset’s potential as a store of value and a means of preserving capital. As the cryptocurrency market continues to evolve, it will be interesting to see how other companies follow Méliuz’s lead and explore the potential of bitcoin as a treasury asset.
