New York University Professor Urges Companies to Stay Away from Bitcoin
Date: 2025-07-22 Author: Henry Casey Categories: CRYPTO PAYMENTS
Aswath Damodaran, a professor at New York University, expressed doubt about the advisability of companies investing in Bitcoin. According to him, the main task of corporate cash reserves is to be a reliable safety cushion in difficult times, and not a source of new risks. He noted that it is during sharp market drops that companies especially need liquid assets, but Bitcoin only loses value at such times.
In addition, the professor warns that a significant share of Bitcoin in an investment portfolio can confuse shareholders and clients. According to Damodaran, for a successful business, the priority should be the development of key areas, and not earnings on speculation. High volatility of cryptocurrency can distort financial reports and make it difficult to understand the real state of affairs.
Damodaran also criticized the skills of top managers in working with digital assets. He believes that most company executives do not have sufficient trading experience and often make mistakes: they buy cryptocurrency at its peak and get rid of it when it gets cheaper. In his opinion, it would be much wiser to pay out free funds to shareholders - in the form of dividends or shares, allowing them to decide how to manage their income.
The professor is particularly concerned about the attitude of American regulators to the trading of bitcoin and NFTs among corporations. He warns that even if investors support such steps, the US Securities and Exchange Commission (SEC) may take a tough stance due to the lack of clear rules in this area. As a result, companies risk facing sanctions or additional inspections.
At the same time, Damodaran admits that there are situations when buying bitcoin is justified. For example, for companies operating in unstable economies like Argentina, such assets can help preserve capital. Also, cryptocurrency looks logical on the balance sheet of organizations whose activities are directly related to digital assets, for example, the Coinbase exchange.
The professor's criticism of Bitcoin is not new. Previously, he expressed the opinion that the first cryptocurrency is unlikely to become a full-fledged means of payment due to the high cost of transactions and limited emission volume. According to the expert, these factors make the use of Bitcoin for mass micropayments extremely problematic.
Thus, Damodaran insists: corporations should weigh all the risks and think about whether they really need Bitcoin as reserve assets, or whether it is better to leave this instrument to professional traders and specialized companies.
