Advantages and Disadvantages of Crypto – Assets for Charities
Published on April 28, 2023 by Grace Brophy and Josephine Heesh
As technology continues to advance and charities explore new and modern ways to fundraise, with great caution, they may investigate how crypto assets could be used.
Crypto-assets describe a class of asset that includes crypto-currency, digital tokens, and coins. Crypto-assets do not exist as tangible forms of currency, but rather as digital tokens stored in a digital “wallet”.
What are the benefits?
- Crypto-currency is de-centralised and is not controlled by the Government. Each token or coin is a specific piece of code which cannot be replicated or interfered with. This makes the transactions very secure.
- The main benefit of crypto-assets is that they can facilitate a global selection of potential donors.
What are the risks?
Many charities do not have the resources to manage crypto-assets. This often means that they are forced to outsource the management of the assets to an external third-party.
The outsourcing of financial management of crypto-assets has the potential to contravene a charity’s obligation under Governance Standard 5: in particular, the duty to ensure that the financial affairs of the charity are managed responsibly.
What should charities do?
- Consider implementing crypto-currency policies that clearly set out the processes for the charity and donors to follow.
- Understand and implement systems for gathering information to comply with reporting requirements.
ACNC have recently issued this guidance charities and crypto-assets.
