The trouble with all of these treasury companies is they’re structured finance, not vanilla equity. There’s a reason why people buy individual stocks but rarely bonds - sophisticated people can transfer your money into their pockets many ways, many of them subtle,
It’s been really eye opening to dig into the Ethena ENA treasury company SPAC. It’s a perfect tool to transfer wealth in various directions in a zero- or negative-sum manner.
But it looks like one of the better ones! It doesn’t appear to plan on leverage so unlikely to blow up
Miles offers some good, practical questions here as well. Most of these just seem like amateurish capital structures with “heads I win, tails you lose” waiting for shareholders.
Few questions nagging me about treasury management companies:
(1) How do you comply with ongoing PubCo disclosure obligations? If you disclose ongoing efforts of the digital asset issuer, you're increasing securities laws risk for the digital asset. If you don't, you may be committing fraud.
(2) How do you reconcile a commitment to digital asset holders to support the price of the asset with equity capital raises of the PubCo with the Gary Plastic case?
(3) What do you do when the shares eventually trade below NAV?
These problems are manageable for treasury management companies being set up by third parties for very mature projects like BTC, ETH, and SOL. I'm not sure these problems are solvable where management teams of less mature projects are spinning up and controlling these public vehicles themselves.
Crypto lawyers should be doing a better job here.
Say what you will about Saylor, but at least his capital structure (so far) is designed thoughtfully. I think he’s irresponsible sometimes but he at least thinks about how to avoid forced selling.
I’m not convinced many of the new companies think beyond next month or quarter
My great hope is that ETFs outcompete these things. If someone really wanted leveraged, undiversified exposure to a token, that seems cheaper, easier, and feeds fewer fees to people who shouldn’t get them.
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