Peter Smith, a strong advocate for digital asset treasuries (DATs) and co-founder/CEO of Blockchain.com, anticipates continued adoption of crypto treasury strategies by publicly traded companies. However, he foresees a future wave of mergers and acquisitions within the sector.
“We’ll likely see more companies embrace this strategy until the pool of available leadership teams or shell corporations dwindles. That’s the beauty of capitalism,” Smith explained in an interview with The Block. “Eventually, momentum will slow down, and that’s when things get really interesting. Consolidation will occur, with the strongest management teams and backers acquiring significant portions of the space, often under favorable capital arrangements.”
Earlier in the week, Bitcoin DAT Strive, led by Vivek Ramaswamy, reached an agreement to purchase Semler Scientific, another firm known for its Bitcoin treasury. This merger will establish a new entity holding almost 11,000 BTC, valued at over $1 billion. Analyst Mark Palmer from Benchmark suggests that smaller companies with notable crypto holdings but lower market capitalizations present compelling opportunities for stock-based mergers.
According to Smith, Blockchain.com has been a prominent player in the DAT arena, investing over $200 million in approximately a dozen companies. These investments include Bitcoin-focused DAT ProCap Financial, Ethereum treasury BitMine Immersion, and Toncoin DAT Ton Strategy.
Smith, a seasoned crypto industry figure, noted that the strategy of acquiring small-cap shell companies and repurposing them isn’t novel. He mentioned the biotech industry’s long-standing use of shell corporations and PIPEs (private investments in public equity). However, the application of these tactics for the explicit purpose of accumulating digital assets was inspired by Michael Saylor’s MicroStrategy.
Digital Asset Treasuries Evolve Beyond Bitcoin
MicroStrategy, now known as Strategy, proved that accumulating cryptocurrency, specifically Bitcoin, could significantly enhance shareholder value. This success prompted numerous smaller, Nasdaq-listed companies to emulate Strategy’s approach and rebrand themselves as DATs earlier this year.
The initial wave of DATs primarily acquired Bitcoin and Ethereum. Subsequent iterations broadened the model to include altcoin-based treasuries. Today, DATs exist with the explicit goal of accumulating XRP, Dogecoin, BNB, and other cryptocurrencies.
According to The Block Data Dashboard, crypto treasuries primarily holding Bitcoin, Ethereum, or Solana collectively manage over $120 billion in digital assets. This growth has been fueled by substantial capital influx, with DATs attracting over $20 billion in venture capital funding year-to-date.
However, the surge in DATs has also drawn criticism. Last month, Kadan Stadelmann, CTO of Komoto, characterized the trend as “self-dealing disguised as capital deployment.” This week, The Wall Street Journal reported that U.S. regulatory bodies are investigating potential irregularities in stock trading patterns observed before publicly listed DATs announced crypto acquisition plans. The focus of these inquiries is on identifying unusual trading activity, such as abnormally high trading volumes and rapid stock price appreciation, that occurred shortly before these public announcements.
Two Distinct Types of Digital Asset Treasuries
Smith identifies two fundamentally different motivations for establishing a DAT.
“There are two separate rationales for creating a DAT. One is to function as an investment vehicle, and the other is to serve as a replacement for traditional foundations,” he clarified.
In the case of an “investment DAT,” Smith believes that investors purchase shares in the hope that the management team, thanks to their expertise and access to discounted token prices, will generate greater returns compared to simply holding the cryptocurrency directly on the spot market.
However, Smith cautions that “there’s potentially more risk” associated with investing in DAT shares than with “simply holding the underlying crypto.”
Regarding “ecosystem DATs,” Smith describes them as entities intended to “replace traditional foundations with C-Corps that eventually become publicly listed.” He adds, “People often overlook that the prevalence of Cayman or Swiss foundations in the crypto space is a direct consequence of unfavorable regulations.”
Smith’s extensive experience in the crypto industry dates back to 2011, when he founded Blockchain.com. The company achieved early success, securing a $14 billion valuation in a 2022 funding round.
“We couldn’t operate as a Delaware C-Corp… which is the standard for most tech startups… so using a foundation was simply a way to navigate regulatory hurdles,” Smith explained.
He remains confident in the long-term viability of DATs: “It’s a sector and a vertical that’s here to stay permanently.”
Beyond investing in DATs, Blockchain.com actively serves the DAT market by providing custody, trading, and staking services.
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