The corporate treasury, once a predictable bastion of cash and low-risk bonds, is undergoing a radical transformation. What began with Bitcoin is now a full-blown diversification into a wider array of digital assets, but as allocations swell, so do concerns over the debt-fueled strategies funding this new frontier.
The C-suite playbook is being rewritten. For much of the past year, headlines have tracked the audacious Bitcoin accumulation strategy of firms like Michael Saylor’s Strategy (formerly MicroStrategy). But the narrative is rapidly evolving. The trend of public companies converting cash reserves into cryptocurrency is no longer a Bitcoin monologue; it’s becoming a diversified dialogue featuring Ethereum (ETH), Solana (SOL), and now, even XRP.
In the past week alone, the crypto treasury club has welcomed new, ambitious members. VivoPower and the Nasdaq-listed Webus have announced plans to acquire $100 million and $300 million in XRP for their respective treasuries. Not to be outdone, SharpLink is moving to establish a $425 million ETH treasury.
This expansion signals a significant new phase. According to data compiled by Galaxy Research, at least 28 public companies now hold significant crypto treasuries. While Bitcoin remains the dominant choice with 20 companies, the portfolio is diversifying: four are focused on SOL, and two each are now dedicated to ETH and XRP. The message is clear: the corporate race for digital assets is on, and the field is widening.
What’s driving this unorthodox pivot? Corporate treasurers are navigating a landscape rife with macroeconomic uncertainty. In a detailed study, analysts at Fidelity highlight a confluence of factors pushing companies beyond traditional safe-haven assets like treasury bills.
The unprecedented fiscal stimulus following the COVID-19 pandemic, totaling over $10 trillion from major economies, has stoked persistent fears of fiat currency debasement. Combined with volatile interest rate cycles that can diminish returns on traditional holdings, corporations are actively seeking uncorrelated assets to protect their purchasing power.
This strategic shift is bolstered by significant regulatory and accounting tailwinds. The U.S. Securities and Exchange Commission’s approval of spot Bitcoin ETFs, coupled with the EU’s comprehensive Markets in Crypto-Assets (MiCA) framework, has provided a level of institutional legitimacy. Crucially, a 2023 rule change from the Financial Accounting Standards Board (FASB) now allows companies to report the fair value of their crypto holdings, enabling them to reflect asset appreciation on their balance sheets—a powerful incentive in a bull market.
For proponents, this is not a speculative fling but prudent, forward-thinking financial engineering—a necessary adaptation to a world where digital scarcity may prove to be the ultimate hedge.
While the strategic rationale is compelling, the execution is raising red flags. The primary source of skepticism, as noted by Galaxy Research and other market watchers, is the method of funding: debt.
Many of these treasury acquisitions are not financed through cash flow or equity but through borrowed funds, predominantly in the form of low- or zero-interest convertible notes. Herein lies the risk. These notes allow investors to convert their debt into company stock if the share price rises above a predetermined level (i.e., the note is “in-the-money”).
The danger emerges if the company’s stock stagnates or falls. If the notes are “out-of-the-money” at maturity, the company must repay the debt in cash—cash it may not have, especially if the value of its newly acquired crypto assets has also fallen.
Critics, have called the trend a “dumpster fire in the making,” pointing out that many of the companies adopting this strategy were unprofitable to begin with. The fear is that crypto is being used as a speculative lifeline to distract from underlying operational weaknesses, rather than as a sound treasury strategy. Coin Bureau’s Nic Puckrin echoes this sentiment, warning that these corporate “tourists” may be the first to sell in a bear market, potentially triggering a wider price collapse.
In a worst-case scenario, a treasury company facing a margin call or debt maturity has four primary options:
While the concerns are valid—especially given the crypto industry’s history with leverage—the immediate threat may be overstated. A recent analysis by Galaxy Research on the debt issued by Bitcoin treasury companies reveals that the bulk of these obligations don’t mature until between June 2027 and September 2028.
This timeline provides a significant runway. It suggests that while a day of reckoning may come, it is not imminent. Companies have time and, importantly, a range of traditional financial tools at their disposal to navigate challenges without necessarily resorting to a forced sale of their crypto assets.
Furthermore, it’s essential to distinguish between strategies. Companies that fund asset purchases through equity sales, while dilutive, do not incur the liabilities or default risks associated with debt financing, posing a much smaller systemic risk.
The corporate crypto treasury trend has passed its infancy and is now entering a complex adolescence. The coming years will serve as the ultimate “crash test.” As debt maturities approach and the market inevitably cycles, we will discover which companies are truly strategic long-term holders and which were merely tourists. The line between visionary strategy and reckless speculation is being drawn on public balance sheets, and the outcome will undoubtedly shape the future of corporate finance.