Digital asset treasury companies (DATs) are rapidly emerging as a new investment opportunity, promising to arbitrage the premium on crypto tokens by leveraging existing publicly traded companies. However, the rush to market is creating peculiar risks as various non-related businesses, including biotech and toy manufacturers, are transformed into crypto-focused entities through reverse takeovers. The pressure to meet exchange listing requirements is significant, with reports highlighting one such company, Sharps Technology, which reported zero revenue and substantial operating losses, raising concerns about its viability. Investors are facing the risk of these DATs trading below their market net asset value (mNAV) if they’re excluded from key indices like Russell, which is crucial for institutional investment. With a focus on speed over quality, these ventures may be undercapitalized and more susceptible to legal challenges, which makes the typical business risks even more pronounced in this unusual venture.

Source 🔗