Hi readers, In today's newsletter, Upexi's Brian Rudick says that digital asset treasury companies, at least those underpinned by end game-winning assets and the right strategy, create tremendous shareholder value and may be the best way to invest in digital assets for many investors. Then, Joshua de Vos of CoinDesk Data shares the April 2025 edition of the Exchange Benchmark report which sheds light on which exchanges operate at institutional standards and those still falling short. Thanks for joining us. |
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The Case for Digital Asset Treasury Companies |
A plethora of digital asset treasury companies have recently come to market, looking to not only hold crypto as a treasury asset but also raise the capital to do so. Furthermore, such companies are no longer confined to bitcoin, and continue to move down the altcoin risk curve. Given that 40 Act issues are potentially less of a concern with a more open SEC combined with MicroStrategy's wild success, it's no wonder this movement is accelerating. Amidst much misunderstanding, we contend that digital asset treasury companies, at least those underpinned by end game-winning assets and the right strategy, create tremendous shareholder value and may be the best way to invest in digital assets for many investors. A key reason the digital asset treasury model is so powerful is that it offers multiple compounding value accrual mechanisms. For example, digital asset treasury companies focused on premined assets may acquire locked tokens at a discount, which aligns with a HODL strategy and creates built-in gains for shareholders as the discount moves to par over time. In addition, digital asset treasury companies focused on proof-of-stake assets may stake their treasuries, turning them from idle to productive assets. And most importantly, digital asset treasury companies can utilize intelligent capital issuance for the benefit of shareholders — which is exactly how MicroStrategy increased bitcoin per share by 74% and created a $13B bitcoin gain for shareholders last year alone. The capital markets component may create a virtuous cycle that, when activated, is extremely powerful. It starts with the market valuing the company at a multiple of the digital assets it holds. This comes about for several reasons, including: |
- Access to value accrual mechanisms that would otherwise be inaccessible (like buying locked tokens).
- Paying a premium for digital assets in the form of a familiar equity security.
- Investors present-valuing the future spread between the company's cost of capital and the expected return of the digital asset (which is added to the NAV and is positive when markets expect strong forward digital asset returns).
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Intelligent capital issuance Digital asset treasury companies can monetize this premium to their underlying assets for the benefit of shareholders via intelligent capital issuance. To do so, companies often issue equity above book value, which is by definition accretive. In fact, issuing equity at 2x book value is like selling $1 for $2 — in other words, buying the digital asset for half off. Furthermore, companies may issue convertible debt which gives the bond market access to digital asset-like returns. It also gives convertible bond arbitrage traders access to a highly volatile underlying asset that they can monetize, while giving the company access to low/no-cost funding, delayed dilution and the ability to sell stock at a premium to the current price due to a typically higher conversion price. These accretive issuances result in rising digital assets per share that, all else being equal, should cause the stock to rise, helping it to maintain its premium to NAV and enabling the virtuous cycle to continue. The digital asset treasury company capital markets flywheel |
What's more, such a construct can enable the digital asset company to benefit from three things when the underlying cryptocurrency rises, triple action price performance if you will: 1) the stock should rise with the digital asset, 2) the multiple (ie. market cap / value of digital assets held) may expand and 3) the company can engage in more frequent and accretive issuances for the benefit of shareholders. While certainly not without risk — the digital asset treasury company must be underpinned by the right asset, must operate in a risk-prudent fashion and have low leverage — investing in digital assets through the right digital asset treasury company can offer investors many benefits. Multiple compounding value accrual mechanisms, a virtuous capital markets flywheel and triple action price performance all make the case for making it an opportune way to access digital assets for many investors. |
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Why the Market Needs a Rules-Based Benchmark for Centralised Exchanges |
Despite billions flowing through centralised exchanges daily, there remains no consistent way to evaluate their underlying operational quality. Surface-level metrics dominate, and transparency varies widely. CoinDesk's Exchange Benchmark report addresses this gap by offering a structured, independently verified framework to assess counterparty risk. The April 2025 edition of the Exchange Benchmark report is our most comprehensive assessment to date. It covers 89 exchanges across spot and derivatives markets and features refined scoring across all eight categories, a more robust regulatory methodology and increased integration of verified licensing data via VASPnet. This is complemented by greater engagement with due diligence questionnaires (DDQs), enabling more transparent and accountable scoring. The result is a clearer distinction between exchanges operating at institutional standards and those still falling short on core risk fundamentals. Why benchmarking remains essential As exchanges scale globally and regulatory scrutiny increases, meaningful due diligence remains difficult. Self-reported figures, fragmented disclosures and varying licensing regimes can mask real vulnerabilities. Without a standardised tool, exchanges can appear trustworthy, while lacking basic internal controls or regulatory clarity. The Exchange Benchmark report is the industry standard for assessing the risk associated with digital asset exchanges. Each exchange is evaluated on 100+ metrics and assigned a grade from AA to F based on performance across eight categories: market quality, security, regulation, KYC, transparency, data provision, exchange leadership and negative events. Grades BB and above are considered top-tier and are eligible for inclusion in CoinDesk's CCIX reference rate. This framework is not about popularity or scale; instead it acts as a necessary filter that allows regulators, institutions and counterparties to separate robust venues from those that merely appear so. |
Key findings from April 2025 Six spot exchanges earned an AA rating: Binance, Coinbase, Bitstamp, Kraken, Crypto.com and Bullish. This is more than in the previous two editions and reflects continued strengthening at the top end of the market. Nineteen exchanges were classified as top-tier overall, up from 16 in November 2024. Gate.io, Bitvavo and WhiteBIT were new entrants this cycle, supported by verified submissions of due diligence questionnaires. More than 60 percent of top-tier exchanges submitted DDQs, allowing for independent validation of key inputs and improved score reliability. |
DDQ engagement continues to correlate strongly with higher scores and benchmark movement. Support for off-exchange settlement also expanded. Sixty-seven percent of AA-rated exchanges now offer the option for assets to remain in third-party custody while still facilitating trading access. This structure reduces direct exposure to exchange-held wallets and improves alignment with institutional risk frameworks. |
Volume and risk Top-tier exchanges accounted for over 60 percent of Q1 spot volume, despite making up less than 20 percent of ranked venues. AA-rated exchanges alone contributed more than 40 percent of global activity. View the full rankings breakdown here. |
The chart above illustrates how operational quality continues to correlate with volume concentration at the top of the market. At the same time, several high-volume exchanges remain in the lower tiers due to gaps in licensing, surveillance or internal transparency. The benchmark report highlights these disconnects and supports a more risk-aware approach to evaluating volume. Looking ahead The next edition of the Exchange Benchmark will be published in November 2025. Exchanges seeking to be included must complete a due diligence questionnaire and provide sufficient access for data integration. As scrutiny from regulators, counterparties and institutional allocators increases, the cost of poor infrastructure is only rising. The benchmark report plays a vital role in setting expectations and keeping the industry accountable — acting as an essential tool for navigating risk in an increasingly complex and consequential part of the crypto ecosystem. Explore the full results and rankings in the April 2025 Exchange Benchmark report here. |
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