I'm always intrigued when I see an unfamiliar financial term.

What is a "crypto-treasury" deal?

wsj.com - SEC crypto treasury deal trading


Unusual Trading Ahead of Crypto-Treasury Deals Draws Scrutiny From U.S. Regulators
SEC, Finra reach out to companies whose shares moved sharply before they announced plans to buy bitcoin, other digital assets

By Vicky Ge Huang, The Wall Street Journal

The Securities and Exchange Commission and the Financial Industry Regulatory Authority have reached out to some of the more than 200 companies that announced this year that they would adopt a crypto-treasury strategy...

In those conversations and letters, the regulators have raised concerns about what they say were unusually high trading volumes and sharp stock-price gains in the days leading up to the companies’ announcements. ...

The playbook: raise money through stock and debt sales to buy bitcoin and other digital tokens. So far this year, 212 new companies have announced plans to raise about $102 billion to buy crypto...For many of these companies, the pivot to crypto treasury often entails contacting a group of outside investors to gauge their interest in privately financing their token purchases. In doing so, though, the investors are expected to keep the companies’ identities confidential—by signing nondisclosure agreements—until they announce their new strategy. ... [end quote]

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A crypto-treasury deal typically refers to a strategy or transaction where a company, often a publicly traded one, decides to allocate a portion of its corporate cash reserves — its treasury — to hold cryptocurrencies, most commonly Bitcoin, instead of or in addition to traditional assets like cash, bonds, or fiat currency.

This is quite different than a company using a crypto stable coin as part of its treasury. The stable coin, like cash, would be expected to maintain a constant value. A cryptocurrency like Bitcoin is highly speculative since its value is volatile. I don't know how it could be considered "treasury" at all. How could it be put onto a balance sheet in the same line as cash?

The essence of the WSJ article is an investigation of insider trading, but I don't care about that.

I just can't understand why investors would invest in (or lend money to) a company that would invest in crypto currencies. If they wanted crypto, why not simply buy it for themselves and save the skim? Or invest in IBIT which is the largest crypto ETF if they wanted to speculate?

This is more end-bubble silliness, along with meme tokens and SPACs.

Wendy