For a brief moment, digital asset treasury (DAT) was the shiny, shiny object on Wall Street.
But by 2026, the novelty has worn off.
The star of the “passive accumulator” has faded, and rightly so. Investors have realized that simply announcing a purchase of Bitcoin is no longer a magic trick that guarantees stock appreciation. The easy money business is over.
But this period of reflection does not sound the death knell; it’s a calculation. It cuts through the hype to reveal a harsh reality: Dozens of public companies are attempting to transform themselves into unregulated hedge funds, often without the risk architecture of a fund or the governance standards of a public company.
The playbook was alarmingly simple: raise capital, accumulate cryptocurrencies, and pray for appreciation.
But as a securities lawyer and CEO who has overseen more than $5 billion in capital raisings, including as general counsel of MARA Holdings during its $6 billion valuation, I know that hoarding is not a good business strategy. It’s a dice game. And as we approach annual reporting deadlines, the bill for those bets is coming due.
If the DAT sector is to emerge from a speculative frenzy and gain credibility as a respected fintech strategy, we need to stop viewing governance as an afterthought. This must be the foundation.
The risk of “blind buying”
The dominant DAT model has been defined by a single mandate: raise cash, buy assets, hold. While this works in a bull market, it exposes shareholders to catastrophic declines in a bear market or during periods of volatility, as we have all seen recently.
Without a clear, articulated strategy explaining why a specific asset is chosen or how liquidity will be managed, these companies are essentially gambling with shareholder value. Retail and institutional investors are starting to ask themselves more difficult questions. They are no longer satisfied with “we believe in crypto”. They want to know: How do you balance capital allocation? What are the specific risks of the protocol you are investing in and what are you doing in terms of risk mitigation? If the current strategy fails, do you have a plan B?
Many of the periodic reports filed today by DATs appear to propose generic risk factors. They tend to reiterate their warnings about volatility and hacking, but fail to address the idiosyncratic risks of their specific treasury assets. This is where the new generation of DATs will need to distinguish themselves to survive and be competitive.
Use the annual report as a storytelling tool
As reporting deadlines approach, DAT management and attorneys must reorganize their filings. For example, the Risk Factors section of a 10-K should not be a regurgitation of all the risk factors that have appeared on EDGAR, the SEC’s primary digital database; it must be a considered assessment of realistic short- and long-term risks, specifically relating to the activities of the issuer in question.
A mature DAT must go beyond the basics and explain trade-offs transparently. Investors deserve to know why a dollar is invested in AVAX (or BTC) versus R&D or marketing, and exactly how the company generates strong revenue streams outside of asset appreciation to keep the lights on during a crypto winter. Additionally, companies should disclose the specific safeguards and controls they have in place to prevent cash flow 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 respect for fiduciary duty.
We recently covered this topic at AVAX One. We recognized the insufficiency of simply announcing a shift to a DAT model, which meant going to our shareholders – the true owners of capital – and seeking explicit approval of our digital asset strategy.
The result was revealing. More than 96% of voting shareholders approved this decision. This wasn’t just a vote for another crypto treasure. This was a vote demanding a governance strategy for crypto.
This gave us a license to operate that “blind buy” DATs simply do not have, and we intend to use this mandate to support fintech using the Avalanche ecosystem.
The regulatory shield
Finally, we cannot ignore the SEC and the broader regulatory landscape. While many in the industry view regulation as a barrier, for a public DAT it is a necessary and welcome shield.
The SEC’s disclosure requirements impose a level of transparency that protects shareholders from the worst excesses of the crypto market. This is a powerful tool that allows public DATs to distinguish themselves from opaque private entities.
By assuming these obligations rather than doing the bare minimum to get by, we build a credibility gap and provide verifiable behavior and security assurance.
We are entering a new phase. The “Wild West” days of cash management are coming to an end. The market will soon punish those who merely collect coins and reward those who build sustainable, governed financial fortresses.
Your annual report is your final dissertation and market reaction is your report card. Make sure you have done your homework.
