The American Crypto Treasury Revolution: Wall Street's New Playbook

For the first 15 years of its existence, American institutional investors watched from the sidelines as the crypto markets swung wildly between boom and bust cycles. Restricted by regulatory oversight and a technological inability to participate in the potential upside of the market, institutions were left on the sidelines. 

Our earlier entries on How the CLARITY and GENIUS Acts Are Reshaping America's AI-Crypto Future and The American DePIN Revolution highlight the impact that pro-crypto legislation can have on opening doors for institutional investors to deploy capital. Now, we turn our attention to the state of American crypto treasuries and the importance that crypto exchange-traded funds (ETFs) are playing on Wall Street.

Let’s begin by examining ETFs and the significant role they play. We’ll then investigate the role of crypto treasuries and why Wall Street is so eager to leverage them. We’ll next look at real-world examples of companies currently engaging in crypto treasuries before concluding with how the future of institutional treasuries may look.

What are ETFs and How Do They Grant Institutional Access?

Exchange-traded funds (ETFs) are a securities investment tool that allows people to gain exposure to the underlying assets they would otherwise be inaccessible. Unlike mutual funds, ETFs trade directly on stock exchanges, which is what makes them the ideal vehicle for institutions seeking exposure to public markets.

Institutional access to crypto ETFs has not always been so simple. The Winklevoss twins first filed for a Bitcoin ETF product back in 2013. Yet, due to the lack of market maturity and aggressive oversight from the SEC (most notably during Gary Gensler’s chairmanship), it would take a decade before the first Bitcoin ETFs would become available.

Public companies could still add crypto to their balance sheets before the 2024 approvals of  ETFs through institutional-grade custodians like Coinbase and Fidelity. Still, without clear regulatory frameworks, it was uncertain whether they would be exposing themselves to unwanted legal and regulatory scrutiny from regulators. With a fiduciary responsibility to stakeholders, the risk simply outweighed the potential rewards.

The Crypto Treasury Playbook

After the 2024 approvals, Wall Street was now armed with a tool that would finally allow institutions access to the crypto markets, and publicly listed companies could now add Bitcoin to their balance sheets without fear of repercussions. The first and most notorious company to attempt a crypto treasury strategy was Michael Saylor’s Microstrategy (renamed to Strategy). 

Strategy’s innovative approach works by leveraging the stock price of the underlying company to borrow money. Then, using the money to purchase Bitcoin. As the price of Bitcoin rises, the value of the underlying stock starts to increase. The higher the stock price, the more money Strategy can borrow to purchase more Bitcoin. Rinse and repeat. 

Over time, Strategy can weather downturns in the market because they have continually bought Bitcoin periodically at lower prices. Think of it like a dollar-cost-averaging approach, but only on an institutional level. Strategy has seen a meteoric rise in stock price since adopting its Bitcoin treasury. When the company first bought Bitcoin on August 11, 2020 the stock price of the company was $13.49. Today, the company’s stock is valued at $328.53, an increase of over 2,335%.

Beyond Bitcoin Treasuries

Many companies have followed Michael Saylor's example and achieved successs by adopting the Bitcoin treasury strategy. With the advancement of other crypto ETFs and ETP products and a change in administration to pro-crypto regulations, companies are starting to turn their attention to various cryptocurrencies to follow a similar strategy. Recently, U.S. President’s Trump Media and Technology Group acquired $6.4 billion worth of Crypto.com’s native CRO (~20% of the circulating supply) for the purpose of establishing a $CRO strategic reserve treasury. The news caused the price of $CRO to double within 48 hours.

Other Bluechip Crypto Treasuries

In July 2024, the SEC expanded crypto ETF offerings by approving nine spot Ether ETF products that could be listed on the Nasdaq, NYSE Arca, and Cboe. This expansion further loosened restrictions and opened up additional treasury opportunities for companies seeking a more diversified crypto strategy.

SharpLink Gaming executed one of the major crypto treasury strategies in public market history. SharpLink Gaming announced a $425 million private placement led by Consensys Software Inc. and other investors to help SharpLink implement the largest Ethereum treasury strategy.

What is unique and different about the Ethereum treasury strategy compared to a Bitcoin treasury is that purchased ETH can be staked, restaked, or loaned out for additional yield. The price of the ETH purchased can similarly lead to a higher company stock price over time, but the additional ETH earned through staking accelerates any increase in treasury holdings. 

The Future of Institutional Treasuries

What started as a fringe investment play by Microstrategy in 2020 has rapidly evolved into a race among U.S. companies seeking to gain treasury exposure to the crypto industry. 

The result is that we are witnessing a wave of American public companies adopting crypto treasury strategies across various tokens, creating sustained institutional demand for American crypto protocols while providing traditional investors with regulated exposure to crypto upside through established financial markets. This all validates that the "Made in USA" crypto thesis is compelling. 

The adoption from Wall Street is also creating unprecedented opportunities for retail investors looking to benefit from indirect exposure to the crypto industry without having to learn the technological hurdles that have hindered adoption. Now, through the use of ETF products, purchasing company stocks that are leveraging crypto treasuries or the eventual inclusion of these companies in larger index funds, more people can participate in crypto.