All you need to know about Bividend
Hyderabad: BTCS, a US-based publicly traded company focused on blockchain infrastructure and technology, has three days ago announced the first-ever dividend payable in Bitcoin by a Nasdaq-listed company. The company refers to this as Bividend (dividend in Bitcoin). Following this, its stock on the Nasdaq has zoomed more than 44 per cent to end at $4.36 on January 5 from $3.02 the previous day. On January 7, it was $ 4.45.
BTCS intends to pay $0.05 per share in Bitcoin, based on the Bitcoin price on the ex-dividend date. Investors who do not opt to receive the dividend in Bitcoin will receive a cash dividend of $0.05. Since 2014, BTCS has been working in the area of developing the infrastructure supporting blockchain technology.
The announcement has created a buzz in the blockchain and crypto segments across markets.
Why Bividend?
The company in a note said that it wanted to offer Bividend as a reward to its long-time shareholders for their continued support. It is also a means to encourage financial freedom by providing the means to enable direct ownership of Bitcoin and other digital assets. It will be given to those who opt for it.
Work
The note said that the company is the first US public company to mine Bitcoin, to implement a digital asset treasury strategy, and to secure next-generation proof-of-stake blockchains. Staking is a way to put the crypto to work and earn rewards on it. It means active participation in transaction validation. Anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn staking rewards.
“This is a moment we have long anticipated since the company purchased the domain, bividend.com, in February 2015. BTCS is now in the financial position required to execute on the company’s vision,” said Charles Allen, Chief Executive Officer of BTCS, in the note.
BTCS’ year-end 2021 stock price of $3.14 per share represents a 12.6 per cent discount to the company’s digital asset holdings and cash position of $3.56 per share, or $37.8 million. This is an ideal time to reward our shareholders with a non-taxable return-of-capital Bividend, the CEO said adding that payment of Bividend is an important step in showcasing the disruptive nature of blockchain technology.
It has set a record date of March 17 to leave ample time for its shareholders to complete the opt-in process by March 16. BTCS said adding that it is in a growth phase and it is evaluating the appropriateness of future bividends. It is developing a proprietary staking-as-a-Service platform to allow users to stake and delegate supported cryptocurrencies through a non-custodial platform, which it plans to integrate with its Data Analytics Dashboard, now in beta release. BTCS’ digital asset data analytics platform currently supports six exchanges and over 800 digital assets.
What do Indian players say?
“Investors today are looking away from traditional ways to diversify their portfolio, hence to meet the needs of these investors gave rise to this newly launched feature. It is an easy way to get exposure if someone is already holding the equity but personally I would not advise purchasing equity to be eligible for bividends. One may as well buy $BTC, but buying equity of a company should always be based on its fundamentals,” said Tarusha Mittal, COO and Co-founder, UniFarm, a group staking and yield farming fintech solution.
Bividend, as a concept, refers to a one-time dividend that the company pays to its shareholders in the form of bitcoin-based on the Bitcoin price on the ex-dividend date.
Will Indian companies follow suit? “Regulatory hurdles might make it difficult, but who is to say what the future will bring,” said Mittal.
Ashish Anand, CEO and Co-founder, Brú.Finance, a decentralised finance lending platform that tokenises real-world assets, sees the birth of Bividend as a positive development for the industry. “Avenues like this will finally bring mass adoption of cryptocurrencies. However, Bividend is not a new sort of financial engineering. It is the company paying dividends in Bitcoin instead of fiat. Of course, given the reality that Bitcoin is a long-term deflationary asset while Fiat is long-term inflationary, the demand for company”s shares have shot through the roof”.
“In India, in the current regulatory environment, paying a dividend in cryptocurrency won”t be possible. Section 123 of the Companies Act mandates that the dividend must be deposited in a separate bank account. Payment of dividend in Bitcoin will be violative of the Companies Act regulations,” Anand said.
“Whether Indian players will follow suit or not, depends on the vision and objective of the company. However, there is a possibility that Indian players would embrace this dividend model to benefit Bitcoin holders. Adaptation would bring mass adoption for Bitcoin and could lift up the giant from a Bearish phase,” said Aishwarya Shivakumar, CEO, Oddz Finance, a decentralised finance crypto derivatives trading platform.
“According to BTCS, holding Bitcoins on its balance sheet is valuable but serves no useful purposes. They believe that Bitcoin is a non-productive asset that is simply lying in wallets without much utilities. They also state that it does not create money, which has traditionally been the aim of a publicly traded firm. However, the idea of Bividend could solve this by putting the asset for some productive use. The concept is more like a capital return than dividend that is advantageous for shareholders for being tax-free. Further, it has the appearance of a share repurchase, which adds to its credibility. For BTCS, it would be putting Bitcoin to good use while also making it a productive asset similar to Ethereum or any other altcoins,” Shivakumar explained.
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