Key Highlights
- Small-cap companies are using in-kind crypto contributions to fund digital-asset treasuries (DATs) instead of raising cash.
- In-kind DATs often use unlisted or hard-to-value tokens, putting retail investors at high risk.
- Many DAT stocks now trade below the value of the crypto they hold, with some losing over 65% since launch.
A new report shows that small-cap executives are leaning heavily on in-kind crypto contributions instead of raising cash to fund digital-asset treasuries (DATs), a trend that is putting retail shareholders at greater risk.
As interest from traditional investors fades, executives at small-cap firms are contributing their own crypto instead of raising cash to buy tokens on the open market. The problem is that these tokens are often unlisted, making it hard to value, which leaves retail investors in a risky position.
In 2025, many small firms, especially in biotech and mining, converted into digital-asset proxies. Sponsors provide crypto tokens or raise money to buy them. The company’s stock then trades as a kind of bet on crypto. For insiders, it is an easy way to get liquidity. For investors, it is a bet on potential profits.
Earlier DAT deals raised money to buy tokens in regular markets, giving some independent price checks. In-kind contributions skip this mechanism, leaving insiders to decide the token’s price, sometimes before it starts trading publicly. This puts pricing and trading risk on shareholders, mainly retail investors. Investor confidence is dropping. Many DATs now trade below the value of the tokens they hold.
Risky examples from this year
A recent example is Tharimmune Inc., a biotech firm-turned-crypto proxy, which raised $545 million to buy Canton Coins. About 80% of the money came from unlisted tokens priced at 20 cents. The token started trading on November 10 and is now around 11 cents.
Other examples include Alt5 Sigma Corp., which raised $1.5 billion, half in unlisted WLFI tokens. Flora Growth Corp. raised $401 million, mostly in-kind 0G tokens priced at $3, now trading around $1.20.
Both companies’ shares have fallen more than 65% since announcing DAT plans.
“An 80% in-kind DAT is effectively a thin equity wrapper around one single volatile token,” said Akshat Vaidya, co-founder of Maelstrom, in a Bloomberg report. He added, “If the token drops 50%, the share price falls 80%-100% because the premium evaporates at the same time that forced sellers hit the bid.”
Chris Holland, partner at Singapore-based HM, added, “Ultimately, if market sentiment shifts, public investors in the fund, particularly retail, may be left exposed if the underlying illiquidity is finally tested.”
In-kind contributions have been part of the DAT trade since early 2025. Large, liquid contributions, like Blockstream’s 25,000 Bitcoin into a treasury company, are less risky. But smaller, illiquid tokens are risky because the same insiders usually hold most of the tokens. Retail investors face the most risk if markets turn down.
Also Read: SEC Clears Path for Quicker Approval of Crypto ETFs
