Billionaire VC Tim Draper has urged businesses to hold at least two payrolls’ worth of Bitcoin or other cryptocurrency.
The American, an early investor in several high-profile tech companies including Hotmail, Skype and Twitch, is known to be an advocate of Bitcoin.
The recent failure of Silicon Valley Bank in the United States saw it taken over by US regulator the Federal Deposit Insurance Corporation before First Citizen Bank acquired it yesterday. SVB UK, despite operating as a separate business, was acquired by HSBC for just £1 two weeks ago.
“With the uncertainty created with the failure of the Silicon Valley Bank, and the continued micromanagement by government and over-regulation of banks, founders need to consider a more diversified cash management approach,” advises Draper.
“Since boards and management are responsible for making payroll, even in times of crisis, it is important to build out contingency plans for bank failures that could happen more and more often if government continues to print money and whipsaw interest rates to counteract inflation caused by the over-printing of money.”
His contingency plan includes “keeping at least six months of short-term cash in each of two banks, one local bank and one global bank, and at least two payrolls worth of cash in Bitcoin or other cryptocurrencies”.
He explains: “Excess cash can be longer term, but easily saleable in emergencies. For the first time in many years, governments are taking over banks and governments themselves are at risk of becoming insolvent.
“Bitcoin is a hedge against a ‘domino’ run on the banks and on poor over-controlling governance.”
He also advised companies to consider yield and capital appreciation amid high interest rates and inflation, and to ‘decentralise’ decision-making within businesses that have many staff working from home.