Do Cryptocurrency and Other Blockchains Fit Into Your Association’s Future?

Over the past decade, cryptocurrency became a household name. This new asset class soared last year with a market cap of nearly $3 trillion in global investments. Professional athletes including Aaron Rogers  (opens in a new tab) and Odell Beckham Jr.  (opens in a new tab) requested portions of their salaries be paid in bitcoin, the cryptocurrency with the largest market cap, instead of U.S. dollars.

Are their opportunities for associations to use cryptocurrency to expand their bottom line? Association leaders need to take careful consideration when developing a plan to incorporate cryptocurrency into their business strategy. While cryptocurrency has been a high-performing asset class at times, it is highly volatile. Bitcoin went from an all-time high value of more than $67,000 per coin in November 2021 to around $20,000 per coin in July 2022.

Here are some considerations for your association when it comes to using cryptocurrencies.

Do your demographics fit the profile for cryptocurrency investors? Before you develop a cryptocurrency strategy, consider the demographics of your membership and/or your future members. Associations may not need to develop a cryptocurrency business strategy if their membership is not comprised of cryptocurrency investors or HODLers (people who want to “hold on for dear life”). The best way of knowing this is to look at your demographics and also ask your members. According to a Momentive study  (opens in a new tab), “two-thirds of all crypto investors are under the age of 45.” It is always best to survey your membership to see if they have cryptocurrency portfolios before implementing a strategy.

Are your members seeking to give cryptocurrency donations? Investors do not have to pay capital gains tax on cryptocurrencies donated to charity. Many cryptocurrency investors are looking for places to donate. Does your association or foundation exist for a good cause? Crypto-rich investors may be looking for an organization with a heartwarming cause to donate some of their gains and offset their taxes. According to The Giving Block, a cryptocurrency donation platform, cryptocurrency donations are on average $11,000  (opens in a new tab), which is nearly 100 times higher than the average online donation across the nonprofit sector ($128).

Does your merchant accept cryptocurrency payments? PayPal, Venmo, and Shopify take cryptocurrency payments. If your members are cryptocurrency investors, they may want to use it for purchasing items. This will work best for professional associations with individual payers. Once the asset is on your balance sheet, you will want to update your investment policy to determine if you want to keep the asset as cryptocurrency or convert it into cash.

Are there other ways to incorporate blockchain into my association? Cryptocurrency is a way to use blockchain technology for financial transactions. Another way to use blockchain is through nonfungible tokens  (opens in a new tab) (NFTs), which digitally track authenticity. Perhaps your organization offers a microcredential. It is possible for the credential be turned into an NFT and the proof of ownership authenticated on the blockchain. Furthermore, NFTs could be used as fundraisers (opens in a new tab) at association events. Another opportunity is through creating decentralized autonomous organizations (DAOs), blockchain-based decentralized communities. DAOs can be an additional way to build a deeper sense of community with members and extend your association’s brand. For example, members of the popular and exclusive NFT collection, Bored Ape Yacht Club  (opens in a new tab), created APECoin DAO  (opens in a new tab), which has over $1M market cap today.

Cryptocurrency is an ever-evolving, explosive asset class that offers many opportunities for associations. Understanding your membership and conducting the proper research will help you decide if incorporating a cryptocurrency strategy is best for your organization. After all, it could be a great nondues revenue opportunity for your association to consider.