Original text organized by: Shenchao TechFlow
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, organized from on-site shorthand with some non-essential deletions.
In recent months, many friends have asked me a question: from On-chain Bitcoin transactions to Off-chain stock exchanges, becoming a very popular investment tool in stock trading, which form is more appropriate for this type of investment tool, ETF or DAT (Digital Asset Treasury)?
So my personal conclusion is that perhaps a model like DAT, just like when ETFs first came out, represents a revolution in new financial instruments.
We know that stocks have moved from individual stocks trading on exchanges to the emergence of index funds, and then ETFs of index funds. Innovations in financial instruments have brought about a significant new asset sector. Crypto has transitioned from On-chain to Off-chain through the stock market, allowing 99% of people to easily accept this method, enabling all stock market investors to easily and habitually engage with crypto assets. So which method is better? Is it the ETF method or DAT?
My personal view is that DAT may be the best way for crypto assets to move from Onchain to OffChain. So far, we can see that the only single large commodity and single asset investment tool in the global capital market is the largest ETF, which is gold. There will not be a single stock ETF because stocks are already traded on stock exchanges, making it easy to buy shares. If you want to buy a basket of stocks, such as an index fund, you need other investment tools like Index Funds or ETFs, which provide the most convenient tools for traditional investors. Thus, before the single asset ETF, there was only gold, and after the launch of BTC's ETF, we began to have the second single asset ETF, which is a natural and progressive process, as everyone is accustomed to using ETFs to create investment tools that allow traditional stock market investors to invest in alternative assets like crypto more conveniently.
However, when we evaluate ETFs, we use the Net Asset Value (NAV); whereas for DAT, we use the Market Value. These are completely different concepts. Market value can lead to greater price volatility, while NAV's fluctuations are much smaller than market value. Therefore, as a single investment tool for crypto, I believe DAT is a better approach.
Better liquidity
The greatest advantage of DAT is that it has better liquidity than ETFs, which is the most concerning and core point for any investor.
My observation is that the smoothest and best way to exchange between Crypto and traditional financial assets is through trading on exchanges. The growth in the scale of ETFs comes from subscriptions and redemptions, requiring the participation of three or even more intermediaries, taking 1-2 days to complete settlement. Clearly, this is not as efficient as completing conversions on a distributed ledger, which may only take 2 or 10 minutes. Therefore, the method of trading may become the primary way to convert between traditional finance and crypto assets in the future, making better liquidity a more core advantage of DAT over ETFs.
Better price elasticity
At the same time, market value is more suitable for price elasticity than net asset value. We know that the reason MicroStrategy can continuously establish its financing structure through various financing tools and hold a large amount of Bitcoin is mainly due to the significant volatility of BTC itself. Moreover, the willingness of hedge funds and other alternative investors to invest is also because they can own a more volatile asset through shares, splitting equity and bonds off-market, turning volatility into another tool, protecting their own prices while also allowing for arbitrage. Especially convertible bonds (CB) are often restructured by hedge funds or alternative investment institutions off-market, splitting them apart. Therefore, 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, which is also something ETFs do not have.
More suitable leverage
Third, it has a more suitable leverage. Originally, investing in a single asset had only two extremes—either holding BTC or ETH spot or buying futures or CME contracts. There is a large gap in between, and this gap allows listed companies to design suitable leveraged financing structures, so you only need to hold the stock while the company manages the leveraged structure, thus allowing you to enjoy a premium higher than the price growth of the cryptocurrency itself.
Built-in downside protection
Tools like DAT can provide premiums and come with built-in downside protection. Imagine if the stock price drops below the net asset value, it essentially offers investors a discounted opportunity to buy BTC or ETH. Such market price situations will quickly be corrected by the market, making it a good form of downside protection. Otherwise, you would prefer to buy stocks, which is akin to buying BTC or ETH at a discount.
Considering all these factors, DAT may be a more suitable financing tool for crypto assets. Just like ETFs were very suitable for index or portfolio investment strategies in the stock market back then, perhaps DAT will emerge as a new trend in the next 3 to 5 years.
The asset scale held by DAT may be close to the scale currently covered by stock market ETFs, perhaps 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 suitable for stock assets.
Of course, this is just my personal opinion, thank you all.
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