Digital Asset Treasury Company
A listed company whose primary activity is raising capital in order to hold digital assets on its balance sheet.
The mechanism is straightforward: the company issues equity, convertible notes, or preferred stock, and uses the proceeds to buy the asset, reporting the holdings and the amount held per share. Because the shares are equity in an operating company rather than a fund, there is no creation and redemption process, and the share price can trade well above or well below the value of the holdings per share. That gap matters mechanically, since issuing shares above the value of holdings increases assets per share while issuing below it dilutes them, and debt introduces refinancing and covenant obligations that a fund would not carry. Readers meet these companies in quarterly filings, in announcements of capital raises, and in accounting discussions, since fair-value marks now move their reported earnings directly.
En pratique
Where a treasury company funds purchases with convertible notes, holders of the shares are exposed both to the asset and to the company's obligation to repay or refinance those notes on schedule.
Le malentendu courant
That such a company is simply a cheaper wrapper for the asset, when there is no redemption mechanism to close a gap between share price and holdings, and shareholders also carry the company's debts and operating costs.