Digital-Asset Treasury Companies Push Boundaries of Corporate Finance

The new corporate form represents the latest frontier in the fusion of finance and technology. DATCOs straddle Wall Street’s instinct for innovation with Washington’s penchant for erecting guardrails. Their next test will come not from the markets, but from the regulators.

What began as an experiment by MicroStrategy in 2020, when it converted $250 million in cash to Bitcoin, has evolved into a multibillion-dollar movement testing the limits of U.S. securities law and financial regulation According to an anlysis by Foley & Lardner, public DATCOs collectively held more than $100 billion in digital assets as of late 2025. More than 200 U.S. companies have since announced plans to adopt digital asset treasury strategies, seeking to raise about $102 billion to buy crypto for their corporate treasuries.

Companies are following different paths to becoming DATCOs, per Foley & Lardner. The most straight forward path is through an initial public offering or an exchange-traded product (ETP), like BlackRock’s iShares Bitcoin Trust. Other firms are entering public markets through special-purpose acquisition companies (SPACs), reverse mergers, and private investments in public equity, known as PIPEs. These mechanisms let firms raise capital quickly to buy digital assets, but they come with regulatory scrutiny and disclosure obligations that mirror those of standard IPOs.

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Recent examples include Twenty One Capital’s pending merger with Cantor Equity Partners, a SPAC backed by Tether and SoftBank, and MicroStrategy, which raised $1.7 billion through convertible note PIPEs to fund additional Bitcoin purchases. A newer “phased acquisition” model has also gained traction, where crypto investors take minority stakes in small public firms that later pivot to crypto treasuries, effectively turning them into DATCOs without full mergers.

Despite the creative dealmaking, there is no easy path around regulation. The Securities and Exchange Commission continues to apply traditional investor-protection rules to digital assets, requiring truthful and complete disclosure at every stage. Even transactions structured to avoid SEC registration, such as PIPEs or reverse mergers, remain subject to anti-fraud rules under the Securities Exchange Act.

A particular area of focus is the Investment Company Act of 1940. If a company’s crypto holdings are deemed “investment securities” and exceed 40% of its assets, it could be classified as an unregistered investment company, triggering onerous requirements. To avoid this, DATCOs often retain an operational business alongside their crypto treasury or rely on temporary exemptions when market fluctuations push them over the threshold.

The regulatory gray area has also prompted Congress to act. The CLARITY Act passed by the House but still pending in the Senate, aims to define which digital assets are securities, offering companies a clearer framework for compliance. Until then, DATCOs must balance aggressive treasury strategies with cautious legal structuring, and be prepared for scrutiny from the regulators, exchanges and investors.