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January 16, 2020

HSB: Cryptocurrency gaining momentum among small, mid-sized biz

By Joe Cooper

Small- and mid-sized businesses in the U.S. are leaning into the cryptocurrency phenomenon.

A new survey released Wednesday by specialty insurer Hartford Steam Boiler and Insurance Co. (HSB) shows that 36 percent of small- and mid-sized businesses accept the digital currency as payment for goods and services.

Also, more than half of those companies reportedly purchased cryptocurrency for their own use, the survey says.

Cryptocurrencies are not issued by governments. Their blockchain technology quickly transfers payments with a clear record of the transactions.

HSB’s survey, conducted by Zogby Analytics, relied on a survey in October of 505 U.S. small- to mid-sized businesses. HSB, which provides inspection, risk management and IoT technology services, is a subsidiary of Germany's Munich Re Group, one of the world’s largest reinsurers.

Other findings show that younger companies are more inclined to accept cryptocurrency. For example, 47 percent of businesses accepting cryptocurrency had been operating five or less years, and 21 percent had operated for more than two decades.

A potential carrot for businesses using cryptocurrency includes lower processing fees and quicker payments, but there are significant drawbacks, according to HSB Vice President Timothy Zeilman.

Risks of using cryptocurrency vary, however, their application may make businesses more vulnerable to cyber fraud and computer attacks, Zeilman said. 

“Cyber criminals follow the money and fraud can be a serious problem,” he said. “A number of currency exchanges have been hacked or embezzled and millions of dollars were lost. Small business owners should learn all they can about the technology before accepting cryptocurrency.”

The first cryptocurrency, bitcoin, debuted just over a decade ago. JPMorgan Chase and Signature Bank, meantime, have launched their own cryptocurrencies.

Cryptocurrency has made significant strides since it launched, but it won't become a mainstream investment without the embrace of the Securities and Exchange Commission (SEC).

The SEC has yet to give the green light to any bitcoin projects. 

A CNN report contributed to this story

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