For a brief moment, digital asset treasury (DAT) was Wall Street’s shiny object.
But by 2026, the novelty will have worn off.
The star of the “passive accumulator” has gone out, and with good reason. Investors have realized that simply announcing a bitcoin purchase is no longer a magic trick that guarantees stock appreciation. The easy money trade is over.
But this period of reflection is not a death sentence; It’s a reckoning. It’s stripping away the hype to reveal a stark reality: Dozens of public operating companies are trying to transform themselves into unregulated hedge funds, often without the risk architecture of a fund or the governance standards of a public company.
The manual was alarmingly simple: raise capital, accumulate cryptocurrency, and pray for its appreciation.
But as a securities attorney and CEO who has overseen more than $5 billion in capital raises, including as general counsel for MARA Holdings during its run to a $6 billion valuation, I know that accumulation is not a sound business strategy. It’s a game of chance. And as we approach annual reporting deadlines, the bill for those bets is yet to come.
If the DAT sector is to mature from a speculative frenzy and gain credibility as a respected fintech strategy, we must stop treating governance as an afterthought. It must be the base.
The risk of “blind buying”
The predominant DAT model has been defined by a singular mandate: raise cash, buy assets, hold. While this works in a bull market, it exposes shareholders to catastrophic downsides in a bear market or during times of volatility, as we have all seen recently.
Without a clear and articulated strategy for why a specific asset is chosen or how liquidity will be managed, these companies are essentially gambling on shareholder value. Both retail and institutional investors are starting to ask themselves more difficult questions. They are no longer satisfied with “we believe in cryptocurrencies.” They want to know: How is capital allocation balanced? What are the specific risks of the protocol you invest in and what are you doing in terms of risk mitigation? If the current strategy stagnates, do you have a plan B?
A good number of periodic reports submitted by DATs today appear to offer generic and repetitive risk factors. They tend to reiterate warnings about volatility and piracy, but do not address the idiosyncratic risks of their specific treasury assets. This is where the new generation of DAT will have to distinguish itself to survive and be competitive.
Use the annual report as a narrative tool
As reporting deadlines approach, DAT management and attorneys must renew their filings. For example, the Risk Factor section of a 10-K should not be a rehash of all the risk factors that have appeared on EDGAR, the SEC’s main digital database; It should be a thoughtful assessment of realistic short- and long-term risks, specifically addressing the issuer’s business in question.
A mature DAT should go beyond the basics and explain trade-offs transparently. Investors deserve to know why a dollar is going into AVAX (or BTC) instead of R&D or marketing, and exactly how the company is generating strong revenue streams outside of asset appreciation to keep the lights on during a crypto winter. Additionally, companies must disclose the specific protection mechanisms and controls they have in place to prevent the treasury from becoming a single point of failure.
The “alpha of governance”
The next wave of successful DATs will be defined by their governance architectures. It’s not just about regulatory compliance; it is about shareholder trust and compliance with fiduciary duty.
We recently navigated this at AVAX One. We recognized the insufficiency of simply announcing a pivot to a DAT model, which meant going to our shareholders (the true owners of equity) and asking them for explicit approval for our digital asset strategy.
The result was revealing. More than 96% of shareholders with voting rights approved the measure. This wasn’t just a vote for another crypto treasure. It was a vote that demanded a governance strategy for cryptocurrencies.
It gave us a license to operate that “blind buy” DATs simply don’t have, and we intend to use that mandate to support fintechs using the Avalanche ecosystem.
The regulatory shield
Finally, we cannot ignore the SEC and the broader regulatory landscape. While many in the industry see regulation as an obstacle, for a public DAT it is a necessary and welcome shield.
The SEC’s disclosure obligations impose a level of transparency that protects shareholders from the worst excesses of the cryptocurrency market. It is a robust tool that allows public DATs to distinguish themselves from opaque private entities.
By accepting these obligations rather than doing the bare minimum to survive, we build a moat of credibility and provide verifiable behavior and assurance of safety.
We are entering a new phase. The days of the “wild west” in treasury management are ending. The market will soon punish those who are simply collecting coins and reward those who are building lasting and governed financial strongholds.
Your annual report is your final paper and the market reaction is your report card. Make sure you have done your homework.
