Brazilian fintech Meliuz has announced a strategy to allocate part of its cash reserves in Bitcoin, possibly making it a key asset in its treasury. Shares rose over 25% following the news. Meliuz plans to invest up to 10% of its cash in Bitcoin, having already purchased 45.72 Bitcoin for around $4.1 million. This strategy may enhance returns and attract crypto-investors, despite potential volatility.
Meliuz, a Brazilian fintech, has recently embarked on a novel strategy to reserve part of its cash in Bitcoin, with aspirations of establishing the cryptocurrency as a primary asset within its treasury. Following this announcement, the company’s shares surged by over 25%. This initiative is geared towards achieving long-term returns, taking cues from prominent companies such as U.S.-based Strategy and Japan’s Metaplanet, who are recognized for their substantial Bitcoin holdings.
In its securities filing, Meliuz indicated that it plans to allocate up to 10% of its cash reserves to Bitcoin investments. To initiate this endeavor, the company has acquired 45.72 Bitcoin for approximately $4.1 million. Founded in 2011, Meliuz originally focused on cashback services at online retailers, later diversifying its offerings to include physical retail and digital financial products, such as free digital accounts and credit cards.
Despite going public in late 2020, Meliuz’s stock experienced a decline due to rising interest rates in Brazil. Presently, the company maintains over 240 million reais ($41.72 million) in net cash. Chairman Israel Salmen articulated the company’s viewpoint, stating, “Allocating a significant amount of our capital to fixed income investments may seem like a prudent strategy, but in practice we believe it represents a significant opportunity cost.”
Salmen further noted that this new strategy aims not only to enhance the financial stability of Meliuz but also to position the firm as a leader in the ongoing global financial transformation. The company has committed to a comprehensive analysis regarding the potential for Bitcoin to become the chief strategic asset in its treasury.
Analysts from UBS BB acknowledged that Meliuz’s approach, though relatively novel in Brazil, resonates with a rising global trend of pursuing alternative assets for value retention and investment returns. They commented that, “If successful, the strategy might set Meliuz apart in attracting investors interested in crypto exposure. On the other side, it could create more volatility to the results.”
In summary, Meliuz’s adoption of a Bitcoin reserve strategy marks a significant step in its financial evolution, inspired by global trends and the potential for enhanced returns. By investing in Bitcoin while maintaining a substantial cash reserve, Meliuz aims to position itself as an industry pioneer confronting the financial challenges ahead. The company’s leaders believe this initiative could differentiate them in a competitive market, albeit with the acknowledgment of potential volatility in results.
Original Source: www.usnews.com
