On Wednesday (October 21), FinTech startup Mode Global Holdings PLC (“Mode”) announced that it had become the first publicly listed company (PLC) in the UK to adopt Bitcoin as a treasury reserve asset.
The grand vision of Mode, which was founded in 2019 and incorporated on 5 August 2020, is “to build a next-gen ecosystem that combines the best of banking, payments, investments, loyalty and digital assets.”
Last year, the company created the Mode App (currently only available for the iPhone), a mobile app that makes it very easy to buy, sell, and hold Bitcoin.
More interestingly, the app’s new “Bitcoin Jar” feature that allows you to “generate interest on your Bitcoin holdings, turning your dormant assets into interest-earning assets,” with interest “accrued daily, compounded, and paid weekly in Bitcoin into your Bitcoin Jar.” To create a Bitcoin Jar, you only need a minimum of 0.01 BTC.
Mode charges a 0.99% fee for buying and selling Bitcoin. You can buy Bitcoin with either GBP (that can be deposited via “Faster Payments”) or EUR (which can be deposited via “SEPA”).
Mode says that Bitcoin holdings are secured with the help of “one of the world’s most secure crypto custodians” (which offers “$100m insurance on the assets held in cold storage”).
According to Mode’s press release, it has “allocated up to ten percent (10%) of its cash reserves to purchase Bitcoin and adopt it as a treasury reserve asset.” Mode says that this move is part of its “long-term goal to protect investors’ assets from currency debasement.”
Also, with UK interest rates at record low levels, Mode wants “to diversify away from low-interest money market instruments in order to maximise the value of returns from its recent fundraising.”
Mode goes on to say that it is “one of the first companies with a consumer-facing Bitcoin offering to list on the LSE Main Market.”
Jonathan Rowland, Executive Chairman at Mode, had this to say:
“This decision to allocate part of our cash reserves to Bitcoin is a further step in our mission to build a truly digital financial services business, combining the best of digital assets, payments, loyalty and investment.
“We truly believe that Bitcoin is a vehicle for financial empowerment and, through Mode, investors can gain exposure to this highly attractive asset class through a listed and fully compliant company.
“Faced with the challenges of COVID and with UK interest rates at the lowest level in the Bank of England’s 326-year history, our confidence in the long-term value of Bitcoin has only increased.
“Today’s allocation is executed through a modern, forward-looking but prudent treasury management strategy.”
This decision by Mode to use Bitcoin as a treasury reserve asset follows in the footsteps of U.S. listed companies MicroStrategy and Twitter.
On September 15, Michael Saylor, the CEO of MicroStrategy said that his firm had “purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million.”
And on October 8, Jack Dorsey’s Fintech firm Square announced that it had “purchased $50M in bitcoin.”
Today’s announcement seems like a very smart move by Mode since not only could the UK company make a nice profit from the potential growth in the price of Bitcoin, but by announcing that is using BTC as a treasury reserve asset, Mode is bound to receive a great deal of publicity, which could increase the company’s valuation, as well as encourage other UK listed companies to do something similar.
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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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