In recent years, the cryptocurrency market has witnessed an intriguing trend: corporations amassing significant crypto holdings as part of their balance sheets. These companies, often known as Digital Asset Treasury companies (DATs), have rapidly raised tens of billions of dollars to acquire cryptocurrencies like Bitcoin and Ethereum. As investors and enthusiasts watch this space closely, questions arise over where these companies get their funding and who’s behind the scenes supporting them. Surprisingly, two of the world’s largest asset managers—BlackRock and Vanguard—hold substantial stakes in some of the biggest crypto treasury companies. Let’s delve into what this means and the broader implications for crypto and institutional investment.
What Are Digital Asset Treasury Companies (DATs)?
Digital Asset Treasury companies are firms that strategically include cryptocurrencies as a major part of their asset portfolio. These range from Bitcoin-specific treasury companies to those focusing on Ethereum or other altcoins like Solana. The motivation for companies to enter this arena often revolves around hedging inflation risks and enhancing long-term value.
The trailblazer in this space has been MicroStrategy (now called Strategy), which famously began accumulating Bitcoin in 2020 with an initial $250 million purchase led by then-CEO Michael Saylor. Since then, MicroStrategy has become the largest publicly traded Bitcoin holder worldwide, owning over 630,000 BTC so far. This pioneering move sparked a wave of firms eager to emulate MicroStrategy’s success.
How Do These DATs Raise Billions to Buy Crypto?
Most crypto treasury companies do not slowly accumulate small amounts of crypto. Instead, they usually buy in bulk, spending tens or even hundreds of millions in single transactions. To raise the immense capital needed, companies often turn to two main financing approaches:
- Issuing New Shares: Companies sell additional stock to raise capital. This is often done through “At The Market” (ATM) programs, which allow firms to issue shares gradually, offering flexibility and minimizing negative impact on stock prices.
- Convertible Notes and PIPEs: Another popular method is issuing convertible notes, which are debt instruments that can later be converted into shares. PIPEs (Private Investment in Public Equity) allow companies to sell shares directly to investors, typically at a discount, which is common during mergers or special purpose acquisition company (SPAC) deals.
For example, MicroStrategy announced ambitious plans such as the "2121" and later the expanded "4242" program to raise tens of billions for Bitcoin purchases by issuing a combination of equity and fixed-income securities.
The Role of BlackRock and Vanguard: Unexpected Giants in Crypto Treasury Holdings
Perhaps most eye-opening is the revelation about who owns large stakes in these crypto-heavy companies. Vanguard, known for its cautious stance on Bitcoin—previously declining to offer Bitcoin ETFs—is ironically the largest shareholder in MicroStrategy, holding around 15% of the company’s stock. BlackRock, the world’s largest asset manager, also possesses a notable stake of approximately 5% in MicroStrategy.
Similarly, Marathon Digital Holdings (Mara), the second-largest Bitcoin treasury company with about 50,000 BTC mainly obtained through mining and purchases, also counts BlackRock and Vanguard as its biggest shareholders. BlackRock holds a 15% stake, and Vanguard maintains around 12%.
These two giants are consistently present as significant backers in various crypto treasury companies, despite their historically conservative approach to direct crypto exposure. Their involvement highlights a nuanced institutional strategy: they may not offer crypto products directly to retail investors but are actively participating in and supporting firms deeply embedded in the cryptocurrency space.
Emerging Players and Strategies
A newcomer, 21 Capital, founded by Strike CEO Jack Mallers, recently announced their entry into the Bitcoin treasury market with a reverse merger backed by $3 billion worth of Bitcoin from founding partners such as Tether, Bitfinex, and SoftBank. Although not yet publicly traded, plans are underway for listing, signaling continued growth and interest in corporate crypto accumulation.
On the Ethereum front, treasury companies are not just hoarding ETH for price appreciation but seeking exposure to DeFi, tokenization of real-world assets (RWA), stablecoins, and other burgeoning decentralized finance narratives.
Why Institutional Involvement Matters
The stakes these institutional investors hold serve as a bellwether for crypto’s evolving legitimacy in financial markets. BlackRock and Vanguard’s investments in crypto treasury companies suggest they view these firms as key vehicles for gaining exposure to digital assets indirectly, managing regulatory and reputational considerations while still embracing the growth potential within the blockchain ecosystem.
Such ownership also implies that major financial institutions have significant influence on the decisions, strategies, and governance of these crypto treasury companies. This involvement could affect how these companies operate, their risk profiles, and even impact crypto market dynamics through large-scale buying or selling activities.
What Should Crypto Enthusiasts and Investors Take Away?
- Institutional backing is real and substantial: The presence of BlackRock and Vanguard amongst the largest shareholders in crypto treasury companies dispels the myth that only fringe investors hold significant crypto exposure.
- Indirect participation remains a theme: While direct crypto products from these firms may be limited, they actively invest in companies that are leading corporate crypto adoption.
- Market impact is significant: With nearly a million Bitcoins held by publicly traded treasury companies (about 4.7% of Bitcoin’s supply), the decisions by these major shareholders influence overall market liquidity and price stability.
- Broader adoption is ongoing: The expansion from Bitcoin-focused companies to Ethereum and altcoin treasury companies illustrates increasing corporate interest in the decentralized finance and blockchain space.
Conclusion
The intersection of traditional finance titans like BlackRock and Vanguard with the fast-evolving world of corporate crypto treasuries marks a significant milestone in crypto’s maturation. Their sizeable stakes in companies dominant in cryptocurrency holdings reveal not only hidden layers of crypto asset ownership but also signal an institutional recognition of digital assets as a valuable addition to diversified portfolios.
For investors and observers, understanding who funds these crypto treasury companies and their hidden backers offers important context about the market’s current landscape and future trajectories. As digital asset adoption by corporations grows and institutional involvement deepens, staying informed will be key to navigating this exciting frontier in finance.
By Wolfy Wealth - Empowering crypto investors since 2016
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Disclosure: Authors may be crypto investors mentioned in this newsletter. Wolfy Wealth Crypto newsletter, does not represent an offer to trade securities or other financial instruments. Our analyses, information and investment strategies are for informational purposes only, in order to spread knowledge about the crypto market. Any investments in variable income may cause partial or total loss of the capital used. Therefore, the recipient of this newsletter should always develop their own analyses and investment strategies. In addition, any investment decisions should be based on the investor's risk profile.
