Xiao Feng Advocates for Digital Asset Treasury over Crypto ETF

Xiao Feng, Chairman and CEO of HashKey Group, believes Digital Asset Treasury (DAT) is a better approach for crypto assets than ETFs. DAT offers superior liquidity, higher price elasticity, a more reasonable leverage design, and a built-in price protection mechanism, making it a more favorable option for investors.

Digital Asset Treasuries (DATs) have surged in popularity in 2025, raising over $15 billion and enabling public companies to accumulate cryptocurrencies like Bitcoin and Ethereum. While offering investors leveraged exposure to crypto without direct holdings, DATs introduce significant risks tied to leverage, market volatility, and corporate governance.

Operating Model: DATs often go public via reverse mergers, avoiding traditional IPO scrutiny. They raise capital through equity offerings and invest heavily in digital assets such as BTC, ETH, SOL, XRP, and TON. Stock Premiums & Leverage: During bull markets, DAT stocks trade at high premiums to net asset value (NAV). Companies use leverage (e.g., convertible bonds) to amplify returns, but this increases vulnerability during downturns. Risks of Discounts & Liquidations: In bear markets, premiums can turn into discounts, forcing companies to consider: Maintaining holdings and waiting for recovery Being acquired by other DATs Selling crypto to buy back shares Selling Pressure & Incentives: Executives compensated in stock may prioritize short-term NAV stabilization over long-term holding, potentially triggering large-scale token sales. Impact on Crypto Markets: Coordinated selling by DATs could create negative feedback loops, exacerbating price declines. Ethereum is particularly exposed, with DATs holding over 4.1 million ETH (~3.4% of supply). Ethereum Price Vulnerability: If DAT stock discounts emerge, ETH could face: Mild Scenario (10–20% discount): Prices drop to $3,600–$3,800 Severe Scenario (30–50% discount): Prices could fall to $2,500–$3,000 Worst-Case (liquidation crisis): Prices may test $1,800–$2,200 The DAT model, while innovative, remains fragile under market stress, posing systemic risks to both equity and crypto markets.

Xiao Feng, Chairman and CEO of HashKey Group, believes Digital Asset Treasury (DAT) is a better approach for crypto assets than ETFs. DAT offers superior liquidity, higher price elasticity, a more reasonable leverage design, and a built-in price protection mechanism, making it a more favorable option for investors.

References:
[1] https://www.panewslab.com/en/articles/b2a843cd-026e-4481-a13b-3e99f28d7d76