“Digital Asset Treasuries represent the institutionalization of token exposure — but also bring capital markets discipline into crypto.”
Institutional engagement with digital assets is evolving. Where exposure was once limited to direct token purchases or passive funds, Digital Asset Treasuries (DATs) are emerging as a structured bridge between blockchain ecosystems and regulated finance.
A DAT is a corporate entity that accumulates, stakes, and actively manages digital assets as a core part of its balance sheet. Investors participate through equity, convertibles, or structured products, allowing them to access token economics without direct custody.
But with this innovation comes serious financial reporting and tax complexity—and critics argue that DATs carry structural risks that must not be ignored.
Why Investors Are Paying Attention
1. Yield-Driven Exposure to Token Economies
DATs can:
- Earn staking rewards, compounding token balances over time.
- Generate incremental yield through DeFi participation.
- Accumulate tokens in downturns, enhancing convexity on recovery.
This positions the structure as a hybrid of income-generating asset and growth exposure.
2. Institutional Structure, Familiar Rules
DATs offer a corporate wrapper—public or private—that fits within traditional mandates. Investors avoid wallet custody and operational burdens while receiving:
- Audited financials under U.S. GAAP or IFRS
- Tradable or allocable instruments (equity, notes, warrants)
- Regulatory clarity and standardized governance frameworks.
3. Convexity Through Accumulation
Because staking continues regardless of price movement, DAT NAV can grow even in flat or down markets, amplifying upside in future recoveries. For long-horizon allocators, this “yield floor” is a key differentiator from passive spot exposure.
Valuation, Reporting, and Tax: A Core Requirement
DATs aren’t just investment vehicles—they are reporting entities. Their token holdings and financial instruments trigger recurring fair value measurement, tax reporting, and regulatory disclosures.
Key Financial Reporting Frameworks
- ASC 820 (U.S. GAAP) — Fair value measurement for token holdings and instruments.
- IFRS 13 — International fair value standard, often paired with IFRS 9 classification.
- ASC 815 / IFRS 9 — Derivative accounting for token-linked warrants and structured products.
Valuation here isn’t discretionary — it’s embedded in quarterly and annual reporting cycles, requiring independent, defensible support.
Tax Implications
- IRS Notice 2023-34 — staking rewards are taxable upon receipt at fair market value.
- OECD guidelines and similar global frameworks mirror this treatment.
- Capital gains apply on token disposition.
- LP investors may need periodic NAV calculations for K-1 or equivalent reporting.
These factors mean issuers and investors alike must align their accounting, tax, and valuation strategies from day one.
Hypothetical Use Case: Token Lockups, Discounts & Related Party Considerations
“This is exactly the kind of transaction that looks simple on paper — but quickly becomes an accounting and tax exercise in fair value precision.”
Consider a hypothetical SPAC transaction in which a company negotiates a token purchase agreement with a blockchain foundation. The tokens are offered at a discount to market with a multi-year lockup.
At first glance, this might seem like a standard discount. But economically and from a reporting standpoint, the implications are far more complex.
Common Valuation & Reporting Issues
- Fair Market Value vs. Nominal Discount
A negotiated discount (e.g., 15%) may not fully reflect the true economic impact of the lockup. Under ASC 820 / IFRS 13, fair value should incorporate marketability and liquidity discounts, often requiring specialized valuation models.
- Related Party & Arm’s-Length Pricing
If there are overlapping stakeholders or governance links, the transaction can trigger related party considerations under ASC 850 and IRC §482 (transfer pricing).
Independent fair value analysis is often required to substantiate arm’s-length economics for both auditors and tax authorities.
- Quarterly Revaluation
Locked tokens typically require recurring fair value updates as restrictions roll off and liquidity improves. This transforms a one-time deal into a multi-period reporting obligation.
“Token transactions between ecosystem foundations, SPACs, and affiliated parties often resemble structured capital markets transactions more than token sales.”
How Teknos Could Add Value
In scenarios like this, Teknos can:
- Quantify appropriate lockup and marketability discounts under ASC 820 / IFRS 13
- Provide arm’s-length pricing support under ASC 850 and IRC §482
- Deliver quarterly fair value updates over the lockup period
- Produce audit-ready valuation documentation for tax and financial statement reporting
This scenario is hypothetical and provided to illustrate common valuation challenges. It does not reference any specific transaction or client engagement.
Investor Thesis vs. Critical Concerns
Investor Appeal
Yield from staking and DeFi
Familiar legal structure
NAV growth even in flat markets
Regulatory clarity and tradable structure
Potential for long-term upside
Institutional investor participation
Critics’ Concerns
Token price volatility can erode NAV quickly
Regulatory classification of tokens remains unsettled
NAV and equity value can diverge when sentiment weakens
Valuation of illiquid or structured instruments can be complex
Tax liabilities may arise before liquidity
High concentration risk in single-token treasuries
Why Critics Are Wary
Despite the growth of this model, critics point to material risks that shape how capital approaches DATs:
- Regulatory Uncertainty — Token classification remains unsettled in multiple jurisdictions.
- NAV Volatility — Yield provides some cushion, but core exposure remains token-dependent.
- Valuation Challenges — Illiquid or bespoke instruments can be difficult to mark accurately.
- Tax Timing Mismatches — Staking income can be taxable before liquidity.
- Premium Compression — Market sentiment can drive equity prices below NAV even if the treasury remains intact.
Sophisticated allocators address these risks with long-horizon strategies, hedging, and valuation rigor.
Relevant Frameworks & References
Area
Fair value measurement
Derivatives
Related parties
Investment entities
Tax
Framework
ASC 820 / IFRS 13
ASC 815 / IFRS 9
ASC 850 / IRC §482
ASC 946 / IFRS 10, 12
IRS Notice 2023-34 / OECD
Key Implication
Lockup and liquidity discounts must be measured at FMV
Token-linked instruments require mark-to-market treatment
Requires arm’s-length pricing and disclosure
LP reporting and fund structures
Staking income taxable at receipt; capital gains on sale
Closing Thought
Digital Asset Treasuries are both a product of, and a catalyst for, the institutionalization of digital assets.
For investors, they offer yield, structure, and upside optionality. For issuers, they bring serious accounting, tax, and valuation obligations.
Critics see risk where proponents see innovation — but both agree on one point: valuation rigor is central to whether this structure ultimately succeeds.
Teknos sits at the center of that equation, helping issuers and investors turn token exposure into GAAP- and IFRS-compliant financial clarity.
Contact Us: For more information on Teknos’ digital asset valuation services or to discuss hypothetical scenarios involving token issuances, SPACs, or DAT transactions, contact our team here.
Disclaimer: The information contained in this article is for general informational and educational purposes only. It should not be construed as tax, legal, or professional advice on any specific facts or circumstances. You should consult your own tax, legal, and financial advisors before engaging in any transaction, investment, or other activity based on information contained herein. This article does not address all potential tax considerations that may be relevant to your particular circumstances. The conclusions expressed here represent the author’s own views and analyses. They do not necessarily reflect the positions that would be rendered by the author’s firm for any client or for any specific property. While the author has made reasonable efforts to provide accurate information and analysis, all information in this article is provided “as is” without any representations or warranties of any kind. The author and his firm make no representations or warranties regarding the accuracy, completeness, or suitability of the information contained herein. Neither the author nor his firm shall have any liability to the reader or any third party related to or arising from the use of the information contained in this article. The reader assumes all responsibility and risk for the use of information contained herein.
Digital Asset Treasuries: A Structured Bridge Between Token Exposure and Institutional Finance
“Digital Asset Treasuries represent the institutionalization of token exposure — but also bring capital markets discipline into crypto.”
Institutional engagement with digital assets is evolving. Where exposure was once limited to direct token purchases or passive funds, Digital Asset Treasuries (DATs) are emerging as a structured bridge between blockchain ecosystems and regulated finance.
A DAT is a corporate entity that accumulates, stakes, and actively manages digital assets as a core part of its balance sheet. Investors participate through equity, convertibles, or structured products, allowing them to access token economics without direct custody.
But with this innovation comes serious financial reporting and tax complexity—and critics argue that DATs carry structural risks that must not be ignored.
Why Investors Are Paying Attention
1. Yield-Driven Exposure to Token Economies
DATs can:
This positions the structure as a hybrid of income-generating asset and growth exposure.
2. Institutional Structure, Familiar Rules
DATs offer a corporate wrapper—public or private—that fits within traditional mandates. Investors avoid wallet custody and operational burdens while receiving:
3. Convexity Through Accumulation
Because staking continues regardless of price movement, DAT NAV can grow even in flat or down markets, amplifying upside in future recoveries. For long-horizon allocators, this “yield floor” is a key differentiator from passive spot exposure.
Valuation, Reporting, and Tax: A Core Requirement
DATs aren’t just investment vehicles—they are reporting entities. Their token holdings and financial instruments trigger recurring fair value measurement, tax reporting, and regulatory disclosures.
Key Financial Reporting Frameworks
Valuation here isn’t discretionary — it’s embedded in quarterly and annual reporting cycles, requiring independent, defensible support.
Tax Implications
These factors mean issuers and investors alike must align their accounting, tax, and valuation strategies from day one.
Hypothetical Use Case: Token Lockups, Discounts & Related Party Considerations
“This is exactly the kind of transaction that looks simple on paper — but quickly becomes an accounting and tax exercise in fair value precision.”
Consider a hypothetical SPAC transaction in which a company negotiates a token purchase agreement with a blockchain foundation. The tokens are offered at a discount to market with a multi-year lockup.
At first glance, this might seem like a standard discount. But economically and from a reporting standpoint, the implications are far more complex.
Common Valuation & Reporting Issues
A negotiated discount (e.g., 15%) may not fully reflect the true economic impact of the lockup. Under ASC 820 / IFRS 13, fair value should incorporate marketability and liquidity discounts, often requiring specialized valuation models.
If there are overlapping stakeholders or governance links, the transaction can trigger related party considerations under ASC 850 and IRC §482 (transfer pricing).
Independent fair value analysis is often required to substantiate arm’s-length economics for both auditors and tax authorities.
Locked tokens typically require recurring fair value updates as restrictions roll off and liquidity improves. This transforms a one-time deal into a multi-period reporting obligation.
“Token transactions between ecosystem foundations, SPACs, and affiliated parties often resemble structured capital markets transactions more than token sales.”
How Teknos Could Add Value
In scenarios like this, Teknos can:
This scenario is hypothetical and provided to illustrate common valuation challenges. It does not reference any specific transaction or client engagement.
Investor Thesis vs. Critical Concerns
Investor Appeal
Yield from staking and DeFi
Familiar legal structure
NAV growth even in flat markets
Regulatory clarity and tradable structure
Potential for long-term upside
Institutional investor participation
Critics’ Concerns
Token price volatility can erode NAV quickly
Regulatory classification of tokens remains unsettled
NAV and equity value can diverge when sentiment weakens
Valuation of illiquid or structured instruments can be complex
Tax liabilities may arise before liquidity
High concentration risk in single-token treasuries
Why Critics Are Wary
Despite the growth of this model, critics point to material risks that shape how capital approaches DATs:
Sophisticated allocators address these risks with long-horizon strategies, hedging, and valuation rigor.
Relevant Frameworks & References
Area
Fair value measurement
Derivatives
Related parties
Investment entities
Tax
Framework
ASC 820 / IFRS 13
ASC 815 / IFRS 9
ASC 850 / IRC §482
ASC 946 / IFRS 10, 12
IRS Notice 2023-34 / OECD
Key Implication
Lockup and liquidity discounts must be measured at FMV
Token-linked instruments require mark-to-market treatment
Requires arm’s-length pricing and disclosure
LP reporting and fund structures
Staking income taxable at receipt; capital gains on sale
Closing Thought
Digital Asset Treasuries are both a product of, and a catalyst for, the institutionalization of digital assets.
For investors, they offer yield, structure, and upside optionality. For issuers, they bring serious accounting, tax, and valuation obligations.
Critics see risk where proponents see innovation — but both agree on one point: valuation rigor is central to whether this structure ultimately succeeds.
Teknos sits at the center of that equation, helping issuers and investors turn token exposure into GAAP- and IFRS-compliant financial clarity.
Contact Us: For more information on Teknos’ digital asset valuation services or to discuss hypothetical scenarios involving token issuances, SPACs, or DAT transactions, contact our team here.
Disclaimer: The information contained in this article is for general informational and educational purposes only. It should not be construed as tax, legal, or professional advice on any specific facts or circumstances. You should consult your own tax, legal, and financial advisors before engaging in any transaction, investment, or other activity based on information contained herein. This article does not address all potential tax considerations that may be relevant to your particular circumstances. The conclusions expressed here represent the author’s own views and analyses. They do not necessarily reflect the positions that would be rendered by the author’s firm for any client or for any specific property. While the author has made reasonable efforts to provide accurate information and analysis, all information in this article is provided “as is” without any representations or warranties of any kind. The author and his firm make no representations or warranties regarding the accuracy, completeness, or suitability of the information contained herein. Neither the author nor his firm shall have any liability to the reader or any third party related to or arising from the use of the information contained in this article. The reader assumes all responsibility and risk for the use of information contained herein.