Hex Trust CEO Alessio Quaglini warned that not all corporate Bitcoin allocations are the same, urging investors and regulators to distinguish between genuine diversification and financial engineering.
Digital Asset Treasury (DATs) — firms that place bitcoin on their balance sheets — can broaden adoption by giving public-market investors indirect crypto exposure. But Quaglini says the model becomes risky when companies rely on significant leverage or exist solely to hold crypto. “If this listing company exists for the sole purpose of holding crypto, well then, it’s a hedge fund that is publicly traded. It’s a financial engineering kind of exercise,” he said at BTC Asia in Hong Kong.
Market signs back up his concern: a recent Galaxy report shows loan volumes at their highest since 2022 and a roughly $1 billion liquidation wave, while South Korean regulators have already frozen new crypto lending products amid rising leverage risks. Quaglini cautions that leveraged buy-ins supported by issued debt create transparent debt covenants that can trigger forced selling. Traders who can anticipate those triggers risk creating a “prisoner’s dilemma” spiral that amplifies volatility across markets.
Despite the warnings, Quaglini sees current DATs as a first step toward broader institutional adoption. The real inflection point would come if large, cash-rich corporates — think Apple or Google — elected to allocate reserves to bitcoin. That move would be extremely positive for mainstream adoption, provided it’s done without excessive leverage.
Why it matters: Leveraged treasury plays can introduce systemic risk. Investors should scrutinize a company’s capital structure, debt terms and leverage before treating corporate bitcoin holdings as a safe proxy. Regulators and exchanges are likely to keep a close watch on lending-product growth and leverage levels.
Source: CoinDesk. Read the original coverage for full details.