Digital asset ‘treasury’ firms are finding hype is easy to generate, while enthusiasm is infinitely harder to sustain.
The treasury gambit pioneered several years ago by Michael Saylor’s Strategy (NASDAQ: MSTR) was always a bit of a boondoggle, as there seemed to be little financial incentive for injecting a rent-seeking middleman into the token-buying/holding process, beyond eliminating the need to learn how to use a digital wallet.
Meanwhile, the disadvantages are legion, including a lack of claim on the underlying tokens in the event of a bankruptcy filing, a host of additional fees paid to asset managers and advisors that push profitability further and further out, plus little-disclosed perks for treasury insiders, including the use of private jets at shareholders’ expense.
The companies that have gone down this road were predominantly failures at whatever business they attempted to conduct, leaving them in danger of being struck off their respective stock exchanges. But with the bloom now off the treasury rose, some of these companies are once again facing delisting, and this time there’s no magical ‘pivot’ to pull them back from the abyss.
Consider Kindly MD, Inc. (NASDAQ: NAKA), an erstwhile healthcare firm that rebranded to Nakamoto this spring as it launched its BTC treasury. Kindly shares had been struggling to stay above $1, but soared above $28 after its treasury plan was announced. And yet, NAKA closed Wednesday below $0.95, putting its market cap at ~$392 million, while the current value of the 5,765 BTC in its treasury is ~$640 million.
Earlier this month, NAKA reached a deal with fintech firm Antalpha to issue $250 million in convertible debt that will “provide long-term financing for KindlyMD with less dilution risk to its stockholders,” and to buy more BTC.
In September, Bloomberg analysts pressed NAKA CEO David Bailey on the sagging fortunes of many treasury firms. Bailey suggested that this downturn was creating “opportunities for investors, for other Bitcoin treasury companies to be able to pursue accretive [mergers & acquisitions], acquire some of their peers and competitors, and restructure those businesses.”
Bailey could have been writing NAKA’s epitaph, as it seems far more likely that NAKA will be one of the firms being acquired rather than acquiring others. That might mean Bailey will have to start flying commercial again, but hey, crisis builds character, right?
Japan’s Metaplanet (JPX: 3350.T) was a minor boutique hotelier until it launched its treasury play last year and has since gone on to rank fourth overall on the list of BTC treasuries with 30,823 tokens. The company has staked out an ambitious plan to acquire 210,000 BTC by 2027.
Like NAKA, Metaplanet’s share price peaked at over ¥1,930 (US$12.61) during this spring’s treasury mania, but closed Wednesday at ¥475 (US$3.11) after dipping as low as ¥400 (US$2.61) earlier this month following the great flash crash of 2025. That dip brought the company’s mNAV to 0.88x, and the company is only just managing to hold its 1.0x peg as this article is being written.
Metaplanet hasn’t bought any additional BTC since October 1. On October 28, the company announced that it was embarking on a share repurchase program in the hopes of giving its flagging share price a boost. The company will use a BTC-backed credit facility to spend up to ¥75 billion (~$500 million) buying back up to 150 million shares (13.13% of total issued shares) over the next 12 months.
Metaplanet’s argument is that its shares are undervalued when mNAV slips below 1x, ignoring the possibility of eroding public faith in the entire treasury concept. While Metaplanet insists that the buyback is “essential to optimizing long-term value for shareholders,” investors appear unimpressed, as the stock fell nearly 5% the day after the announcement.
Metaplanet is far from the only struggling treasury firm taking the buyback route. On August 25, the Peter Thiel-backed ETH treasury firm ETHZilla Corporation (NASDAQ: ETHZ), formerly a biotech firm called 180 Life Sciences, announced a $250 million stock repurchase plan. The plan was intended to stop the slide in its share price, which had fallen from $106 to $31 in the two weeks before that buyback announcement.
ETHZilla then announced a 1-for-10 reverse stock split on October 15, but this failed to light a fire under the shares. On October 27, the company announced it had sold $40 million worth of its ETH holdings—nearly 10% of its total treasury—to fund its share buybacks “while our common shares trade at a significant discount to NAV.” ETHZilla closed Wednesday at $20.70, down nearly 5% from Tuesday’s close.
On September 30, French semiconductor developer turned BTC treasury Sequans Communications (NYSE: SQNS) announced plans to buy back as much as 10% of its American Depositary Shares. Sequans CEO Georges Karam said the company had spotted an “an opportunity to support our share price and enhance market NAV.”
As of Wednesday’s close, Sequans’ market cap was around $110 million, while its treasury of 3,234 BTC was worth around $370 million, so there’s a whole lot of negative mNAV there to enhance.
Sequans had already played the reverse-stock-split card earlier in September, so there aren’t that many emergency levers left to pull. Except for selling some of its BTC, which the company appears to be preparing to do after onchain data showed the company transferring 970 BTC worth ~$111 million to the Coinbase (NASDAQ: COIN) exchange on October 28.
The transfer could be a custody issue, although the company has yet to publicly comment on the transfer, and you’d think they’d be eager to quash any sales rumors if that wasn’t their intention. Sequans’ shares closed Wednesday at $7.71 (-1.5%), well off their $58 peak this summer.
In a Financial Times article from mid-September, Kaiko analyst Adam Morgan McCarthy suggested that share buybacks were “probably the death rattle” of the treasury firms involved. “They’re just trying to buy time, sustain things, tide things over” until the next token value bubble. McCarthy likened the firms to “a house of cards” that will “collapse very quickly” due to the “oversaturation in the market.”
Architect Partners partner Elliot Chun called buybacks “antithetical” to the whole concept of treasuries, while Bitwise Asset Management CIO Matt Hougan told Forbes earlier this month that treasury firms resorting to buybacks and asset sales would likely signal the “death cry” of these businesses.
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Asian exchanges trying to stem this flow
Despite the dismal fortunes of many treasury firms, new arrivals continue to join the back of this parade, likely because there will always be desperate firms in danger of delisting. However, some prominent Asia-Pacific stock exchanges appear to have had enough of this trend and are taking steps to bar the door.
This month, Bloomberg reported that exchanges in Hong Kong, India, and Australia are erecting new barriers to firms trying to make the treasury pivot. The Bombay Stock Exchange recently rejected an application by Jetking Infotrain that wanted to flirt with treasury status, although the company is appealing this rejection.
Five firms have been stymied by Hong Kong Exchanges & Clearing Ltd, which cited rules barring the listing of ‘cash companies’, aka firms whose assets consist primarily of cash or short-term investments. Unless the firms can show that acquiring assets is an integral part of their operating business, they’re out of luck.
The Australian Stock Exchange (ASX) prohibits firms from holding half of their balance sheet in cash or cash-like assets. The ASX suggests that firms looking to invest in BTC or ETH instead structure their offering like an exchange-traded fund (ETF). Australia’s policy is convincing some would-be treasuries to relocate to New Zealand, where the rules are more permissible.
As Metaplanet’s example shows, Japan’s stock exchange is more tolerant of listed companies holding large cash/cash-like stockpiles, with 14 treasury firms offering shares to the public. Metaplanet was even added to the MSCI Japan Small Cap index in February, but that privileged status appears in danger.
Index provider MSCI Inc recently expressed a desire to purge the likes of Metaplanet and European treasury firm Capital B (EUR: ALCPB.PA) from global indexes due to their resemblance to investment funds, “which are currently not eligible for index inclusion.”
MSCI has proposed a rule similar to Australia’s, barring any firm whose crypto holdings represent over 50% of total assets. MSCI is seeking feedback on this plan and will announce its conclusions on January 15, 2026. Any resulting actions will be implemented in the February 2026 Index Review.
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Strategy dinged with ‘junk’ label by S&P Global
Strategy’s Saylor stated this spring that if a company’s mNAV fell below 1x, “the shareholders have lost faith in the management structure of the business.” Saylor said if Strategy were to find itself in that unfortunate situation, he’d sell his company’s preferred stocks (STRK, STRF, STRC, STRD) and buy back Strategy common stock.
Strategy isn’t quite there yet, as its mNAV currently stands at 1.33x. That’s a slight improvement over the 1.21x bottom it hit during this month’s flash crash, but significantly worse than the 3.4x figure Strategy enjoyed last November following President Trump’s election victory.
Saylor made three separate BTC buys in October, although their cumulative total of 778 tokens is barely 10% of the 7,574 BTC that Strategy announced buying in September. A possible reason for this newfound economy is the fact that the most recent purchases didn’t dilute Strategy’s common stock shareholders, relying solely (for a change) on the company’s dividend-heavy preferred stock vehicles.
Regardless, the purchases didn’t lead to a spike in Strategy’s share price, which has fallen 15.6% over the past month, mirroring the BTC token’s struggles. The company’s market-leading stash of 640,808 BTC makes the company a pure BTC proxy play, rendering its formerly mainstay business analytics software operations an afterthought (relegated to page 116 of the company’s 130-page Q2 earnings presentation).
Strategy has been trying to get itself included in the S&P500, a quest that went down to defeat in September. But the company celebrated this week’s decision by S&P Global (NASDAQ: SPGI) to commence credit rating coverage of Strategy. Saylor called it “the first-ever rating of a Bitcoin Treasury Company by a major credit rating agency.”
That may be, but the S&P assigned Strategy a ‘B-‘ rating, one step below a flat ‘B’ rating, indicating “highly speculative with increased default risk.” A ‘B’ rating is two positions below BBB, and anything below BBB is “junk bond” territory. S&P added that an upgrade to this rating “is unlikely in the next 12 months.”
S&P said it views Strategy’s “high bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low U.S. dollar liquidity as weaknesses.” Plus, Strategy’s “cash flow from operations for the first six months of 2025 was negative $37 million.”
Strategy has “a long bitcoin position and a short U.S. dollar position. Debt maturities, interest on the company’s debt, and dividends on its preferred securities are all due in dollars, while Strategy holds mostly bitcoin.” Should the company lose its ability to raise additional capital via new equity or debt, it would have to sell some of its BTC and “is likely to do so at severely depressed prices.”
On the plus side, Strategy “maintains strong access to capital markets, though this could change in a severe bitcoin stress.” Strategy has also “historically managed convertible debt maturities prudently,” and its rating could rise if the company improves its U.S. dollar liquidity and/or reduces its use of convertible debt.
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ABTC adds BTC, Alt5 Sigma loses CEO
You can’t cover anything ‘crypto’ these days without mentioning the Trump family, which is our cue to note that American Bitcoin Corp (ABTC) (NASDAQ: ABTC), the co-venture of block reward mining outfit Hut 8 (NASDAQ: HUT) and an Eric Trump-linked entity, announced this week that it had “accumulated” 1,414 BTC between September 1 and October 24.
This ‘accumulation’ brings ABTC’s total reserve to 3,865 tokens, good enough for 26th place on the BTC treasuries chart. The additional tokens have come from “Bitcoin mining and strategic purchases,” but there’s no breakdown of how much each of those factors contributed. Shares of ABTC, which went public on September 3, closed Wednesday at $5.48 (-3.5%), well off their $9.31 peak a few days after their debut.
Shares in media outlet Newsmax got a minor bump earlier this month when it announced plans to create a treasury based on BTC and President Trump’s $TRUMP memecoin. The company plans to spend $5 million on the tokens, but didn’t specify how that amount would be split per token. Newsmax says it “expects to be the first NYSE company to purchase” $TRUMP, the value of which CEO Christopher Ruddy believes “should track the success of the Trump presidency, which so far has been impressive.”
Things are a little less impressive over at Alt5 Sigma Corporation (NASDAQ: ALTS), the Las Vegas-based healthcare/fintech firm that in August struck a $1.5 billion deal with the Trump-linked decentralized finance (DeFi) project World Liberty Financial (WLF).
On October 22, Alt5 filed a report with the Securities and Exchange Commission (SEC) in which it revealed that its CEO, Peter Tassiopoulos, was “suspended” by Alt5’s board of directors and “removed of his duties” as CEO on October 16. His suspension was “effective immediately, with pay.” Alt5’s CFO, Jonathan Hugh, has been named acting CEO while continuing to handle his original job.
Beyond this filing, Alt5 has offered no public explanation of the actions its CEO might have taken that prompted its directors to give him the boot. Tassiopoulos joined the company in September 2024.
Alt5’s treasury is based on WLF’s in-house token WLFI, with Alt5 currently holding nearly 7.3 billion WLFI, around 7.7% of the token’s total supply. After a brief surge above $8 in late-August, Alt5’s shares closed Wednesday at just $2.39 (-9.8%), although that’s an improvement over the $1.80 floor it hit last week.
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Watch: Teranode is the digital backbone of Bitcoin
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Source: https://coingeek.com/digital-asset-treasuries-find-hype-is-easy-endurance-is-hard/