Is A Crypto Treasury Company Bubble Forming?

After President Trump signed the GENIUS stablecoin Act into law on Friday, the crypto industry is anxiously awaiting what wave of adoption may come next.

At the signing ceremony, President Trump once again invoked the idea that America was on the verge of a “golden age” as the government finally delivers clarity for those looking to leverage the newest tech in finance. He set expectations pretty high.

“The golden age of America is upon us,” he said. “With today’s signing, the future of crypto and the crypto industry, the US dollar working together … is going to be stronger and bigger and better than ever before.”

To capitalize on what’s to come, there are a few strategies afoot that are pumping prices across the board. Ethereum, for example, surged more than 40% over the last two weeks as a few big buyers look to front-run the banks playing catch up. As we highlighted in our episode on Ethereum treasury companies, that mainly includes Ethereum co-founder Joe Lubin’s Sharplink Gaming and Tom Lee’s Bitmine Immersion Technologies.

But the treasury trend isn’t stopping with Ethereum – just as it didn’t stop with Bitcoin bull Michael Saylor and his company Strategy. But as Dragonfly general partner Rob Hadick tells us, the trend is starting to show a little froth – and potentially a little greed. Hadick told Coinage he and his group of investor friends on a weekend getaway received six calls from people solely to chat about crypto treasury opportunities.

“So that tells you just how much excitement or fervor or just froth there is about that,” he said. “I think it continues to pick up pace as people are making money … but I do think we need to be thoughtful as an industry about what we're promoting and what we're not.”

And to be fair, the largest promoters have been pretty clear about the concept: Provide a little buy pressure as a stop-gap until the cavalry that is TradFi and big banks building onchain arrives en masse.

As Sharplink Gaming’s Joe Lubin explained rather frankly on CNBC a few weeks back, “we still have a lot of ether out there and not enough activity to sop it up, and so that’s a reason why we and others are doing the ethereum treasury strategies.”

Very fair. Very honest.

But as these companies become more popular and issue more shares to buy Ethereum (or whatever underlying asset they are cornering) Hadick points out that the fees being charged also seem to be rising. The so-called “promotes” baked into these are making a lot of insiders quite a bit of cash.

“Traditionally a promote on something like this might be – call it 10%,” Hadick explained, noting the usual level of standard compensation for handling the publicly traded vehicle process. “I've started to see some of them where the promotes and the warrants are 20%, or I saw one over the weekend at 25%.”

As Hadick words it, it’s essentially providing the opportunity for treasury companies to sell $1 for $1.20 or $1.25 – and so long as the community around the underlying asset is happy with the price gains, no one really takes too much of an issue with that. And so long as the real building eventually comes to fruition, the stop-gap may very well be a non-issue. Things could play out differently in the future, if prices turn lower. However, it doesn’t seem like we’re near that point. 

As Bitmine’s Tom Lee told Coinage after becoming Chairman of the treasury company that has now surpassed $1 billion in notional Ethereum holdings, the mission is still the same: Acquire as much ether as possible before other TradFi giants catch up.

“The reason Ethereum is attractive, in  my opinion, is that it is the Layer-1 blockchain where real world assets are becoming tokenized,” he said. “As more things in the financial world and real world become tokenized, then financial institutions like Goldman and JPMorgan and Amazon, Walmart, as they do stablecoins, are also going to want to stake Ethereum itself."

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