Xiao Feng's Full Speech at Bitcoin Asia 2025: ETFs are Good! DATs are Better!

Dr. Xiao Feng, Chairman and CEO of HashKey Group, delivered a keynote speech titled "ETFs are Good! DATs are Better!" at Bitcoin Asia 2025, arguing that DAT may be a more suitable financing tool for crypto assets, just as ETFs were very suitable for index or basket stock investment strategies in the stock market back in the day. Perhaps DAT is a new trend we will see in the next 3 to 5 years. (Background: Concerns behind the boom of Digital Asset Treasuries (DATs): Which tokens carry the greatest risks?) (Additional background: Interest rate cuts, DATs, and the sell-off wave: Has the crypto bull market peaked or is it still in progress?) DAT is a new investment tool with the greatest growth potential for the future, more suitable for crypto assets, while ETFs may be more suited for stock assets. On August 28, Dr. Xiao Feng, Chairman and CEO of HashKey Group, delivered a keynote speech titled "ETFs are Good! DATs are Better!" at Bitcoin Asia 2025, summarized from live transcripts with some non-essential omissions. Many friends have been asking me a question in recent months, from on-chain Bitcoin transactions to off-chain stock exchanges, which have become a very popular investment tool in stock trading. Is it more appropriate to have this investment tool in the form of ETFs or in the form of DATs (Digital Asset Treasuries)? My personal conclusion is that perhaps the DAT model is a revolution in financial tools, similar to when ETFs first emerged. We know that stocks traded individually on stock exchanges later led to the emergence of index funds, and then ETFs for index funds. Innovations in financial tools have created a significant new asset segment. Crypto transitioning from on-chain to off-chain through the stock market provides a method that is currently accepted by 99% of people, enabling all stock market investors to easily and habitually access crypto assets. So which method is better? Is it better to use ETFs or DATs? My personal view is that DATs may be the best way for crypto assets to transition from on-chain to off-chain. We can see that, so far, the only single commodity investment tool in the global capital market is the largest ETF for gold. There will not be single stock ETFs because stocks are already traded on stock exchanges, and you can easily buy stocks. If you want to buy a basket of stocks, like an index fund, you need other investment tools. Index funds or ETFs are the most convenient tools provided for traditional investors. Therefore, previously, there was only gold for single asset ETFs, and after the launch of BTC ETFs, we began to have a second type of single asset ETF. This is a natural and trend-following process, as everyone is accustomed to using ETFs to create investment tools, allowing traditional stock market investors to invest in alternative assets like crypto more conveniently. However, when we value ETFs, we use net asset value (NAV); whereas for DATs, we use market value. These are completely different concepts. Market value brings greater price volatility, while NAV fluctuations are much smaller. Therefore, as a single investment tool for crypto, I believe DAT is the better option. Better liquidity is the biggest advantage of DAT compared to ETFs, which is the most critical concern for any investor. My observation is that the smoothest and best way to exchange between crypto and traditional financial assets is through exchanges. The growth of ETF scale comes from subscriptions and redemptions, which require the participation of three or even more intermediaries, taking 1-2 days to complete a settlement. Clearly, this is not as efficient as completing exchanges through a decentralized ledger, which may only take 2 minutes or 10 minutes. Therefore, trading may be the main method of conversion between traditional finance and crypto assets in the future, so better liquidity is a core advantage of DAT over ETFs. Better price elasticity is another advantage; market value provides more suitable price elasticity than NAV. We know that MicroStrategy has been able to continuously build its financing structure through various financing tools and hold a large amount of Bitcoin, largely due to BTC's inherent volatility. At the same time, the reason hedge funds and other alternative investors are willing to invest is precisely because they can hold a more volatile asset through shares, allowing them to split equity and bonds off-market and turn volatility into another tool for protecting their own price and for arbitrage. Especially with convertible bonds (CBs), which are often restructured by hedge funds or alternative investment institutions off-market. These institutions prefer to invest in companies like MicroStrategy, buying its stocks or convertible bonds, because they can perform structured operations on them. Better price elasticity is something that ETFs do not possess. Thirdly, DATs have a more suitable leverage ratio. Previously, single asset investments only had two extremes – either holding BTC or ETH in spot or buying futures or CME contracts. There is a significant gap in between, which allows listed companies to create appropriate leveraged financing structures, where you only need to hold stocks while the companies manage the leveraged structures, allowing you to enjoy a premium greater than the price growth of the cryptocurrencies themselves. DAT tools can provide a premium and come with built-in downside protection. Imagine if stock prices drop below asset net values, it would effectively provide investors an opportunity to buy BTC or ETH at a discount. Such market price situations will quickly be corrected by the market, so it inherently provides good downside protection. Otherwise, you might as well buy stocks, which equates to buying BTC or ETH at a discount. Considering these factors, DAT may be a more suitable financing tool for crypto assets. Just as ETFs were very suitable for index or basket stock investment strategies in the stock market back in the day, perhaps DAT is a new trend we will see in the next 3 to 5 years. The scale of assets held by DATs may approach the scale currently covered by stock market ETFs, possibly in another ten years. Therefore, I believe DAT is a new investment tool with the greatest growth potential for the future, more suitable for crypto assets, while ETFs may be more appropriate for stock assets. Of course, this is just my personal view. Thank you all.