Why is encryption treasury a better solution compared to Spot ETF?

Crypto treasury (DAT) is becoming the core carrier of the mainstream of crypto assets on Wall Street, providing a more efficient way to invest in crypto assets than ETFs through corporate architecture advantages, leveraging, corporate finance and strategic options. This article is based on an article by ARK Invest and was compiled, compiled and contributed by Foresight News. (Synopsis: MicroStrategy MSTR is rated B- by S&P, is DAT still worth knowing and investing in?) (Background added: ETHZilla sells $40 million to buy back shares in Ethereum, will trigger a knock-on effect of the DAT sell-off? From August to September 2025, crypto treasury (Digital Asset Treasuries, DAT) became the core carrier of the mainstreaming of crypto assets on Wall Street. This shift must have come as a surprise to many in the industry, who had thought that exchange-traded funds (ETF) would continue to dominate rather than be replaced by DATs. What's really going on behind the scenes? MicroStrategy pioneered the Bitcoin DAT model a few years ago, but investors didn't yet know how to apply it to other crypto assets. This article will delve into the market landscape of DAT and the related controversies. The definition of a crypto treasury (DAT) refers to a company that holds cryptocurrencies such as Bitcoin, Ethereum, Solana, etc. directly on the balance sheet, and investors can indirectly gain exposure to crypto assets by purchasing their shares. Unlike spot Bitcoin/Ethereum ETFs regulated by the SEC (SEC), ETFs passively hold cryptocurrencies and issue shares that are 1:1 pegged to the assets they hold; DATs are operating companies that manage positions through leverage, corporate strategy, or financing instruments. ETFs provide compliant asset exposure as regulated public investment vehicles; DAT, on the other hand, introduces enterprise-level risk that gains or losses may exceed the volatility of the underlying asset itself. Long before the term “crypto treasury” coined, MicroStrategy created the first DAT for Bitcoin. Under Michael Thaler, the company downplayed its enterprise software business and went all out to hoard bitcoin. As of September 15, 2025, MicroStrategy purchased more than 632,000 BTC for $46.5 billion, with an average unit price of $73,527. Currently, the company holds more than 3% of Bitcoin's total supply of 21 million coins. MicroStrategy has built up Bitcoin holdings through a variety of financing strategies: an initial issuance of convertible senior notes, followed by a 6.125% coupon rate senior guarantee note, and the real breakthrough came from a mark-to-market equity program. Because its stock ( symbol MSTR) traded at a significant premium to book value, Thaler diluted existing shareholders' equity by issuing new shares, using the proceeds to buy more bitcoin and increase its bitcoin holdings per share. Essentially, the funds provided by shareholders provide leveraged support for MicroStrategy's exposure to Bitcoin. This model has sparked widespread controversy. Critics slammed DAT for “selling $1 for $2 in assets,” meaning investors pay $2 for $2 in bitcoin for $1 on their balance sheets if a DAT trades at twice its market capitalization net worth (mNAV). In their view, this premium is neither reasonable nor sustainable. But to date, MicroStrategy's stock performance has overturned that judgment and delivered strong returns to shareholders. With the exception of a brief discount during the bear market from March 2022 to January 2024, MSTR maintained a significant mNAV premium over the long term. More importantly, Thaler strategically leveraged this premium: issuing shares well above book value, continuously increasing his holdings of bitcoin, and increasing his holdings. The results show that since its first Bitcoin purchase in August 2020, MSTR has not only compounded shareholders' exposure to Bitcoin, but has also significantly outperformed the buy-and-hold strategy. Five years after MicroStrategy first bought Bitcoin, hundreds of DATs are now popping up. These new carriers are hoarding multiple crypto assets such as Ethereum, SOL, HYPE, ADA, ENA, BNB, XRP, TRON, DOGE, SUI, AVAX and many more. The market is now beginning to concentrate on large-cap assets, and a number of well-funded DATs are racing to hoard ETH and SOL. As shown in the chart below, ETH-focused DATs hold a total of 3.74% of Ethereum supply, and Solana-based DATs hold 2.31% of SOL supply. Source: Blockworks, as of August 25, 2025 In our view, while some DATs may be set up for short-term speculative purposes, the ultimate winner may become a more efficient vehicle for crypto assets than spot ETFs. With enterprise architecture advantages, DAT has access to leverage, corporate finance, and strategic options that ETFs cannot. As long as its mNAV premium is sustainable, these benefits will persist and will be explored further in subsequent sections. Why is the mNAV premium for DAT justified? As an asset manager with a large exposure to cryptocurrencies, Ark Investments (ARK Invest) has shown strong interest in the emerging DAT space and has recently invested in the leading Ethereum DAT, Bitwise Ethereum Strategy. Although we are cautious about DATs and pay close attention to their rapid development, we can still understand the reasons why some DATs receive mNAV premiums, mainly including the following: Revenue / Staking Income Smart contracts L1 blockchain ( especially Ethereum ) provides native earnings through the staking mechanism to reward users who participate in network security maintenance. In the crypto asset ecosystem, this yield is essentially equivalent to a “risk-free rate” because it arises within the protocol and does not involve counterparty risk. In contrast, spot ETFs in the United States do not allow you to stake the underlying asset for profit. Even if the regulator changes its stance and is limited by the design of the Ethereum network, ETFs can only stake a small number of positions ( which may be less than 50% ) – the “liquidity limit” of the Ethereum network dictates the number of validators that can join or exit each period. This restriction is critical to network security and prevents malicious attackers from instantaneously firing or shutting down a large number of validators and avoiding a breakdown of consensus mechanisms or state management, which can take up to two weeks for the process of staking or unstaking ETH. While ETFs can circumvent this restriction through liquidity staking agreements, compliance, liquidity and centralization risks may prevent them from staking positions at scale. DAT, on the other hand, offers greater operational flexibility. A typical DAT is a lean organization, often run by a small team, but generating significant revenue. Take Bitwise Ethereum Strategy as an example, if it has a market cap of $100 billion and all ETH is staked,…