Xiao Feng's Bitcoin Asia 2025 Speech Full Text: DAT is More Suitable for Crypto Assets than ETF

Original Source: DeepTide TechFlow

On August 28, Dr. Xiao Feng, Chairman and CEO of HashKey Group, delivered a keynote speech titled "ETF is Good! DAT is Better!" at Bitcoin Asia 2025, based on on-site notes with minor non-essential omissions.

In recent months, many friends have asked me a question. From On-chain Bitcoin transactions to Off-chain stock exchanges, it has become a very popular investment tool in the stock market. So, is such an investment tool more suitable in the form of an ETF or in the form of DAT (Digital Asset Treasury)?

My personal conclusion is that perhaps DAT, in this mode, is like a revolution in a new financial instrument, just as ETF was when it first emerged.

We know that stocks have evolved from individual stocks traded on stock exchanges to the later emergence of Index Funds, and then Index Fund ETFs. The innovation of financial instruments has brought about a significant new asset class. Crypto has transitioned from On-chain to Off-chain, through the stock market, in a way that is currently easily accepted by 99% of people, enabling all stock market investors to easily and habitually access Crypto assets. So, which way is better? Is the ETF way better, or is DAT better?

My view is: DAT may be the best way for crypto assets to transition from On-chain to Off-chain. We can see that so far, the world's only single commodity and single asset investment tool in the global capital markets is the largest ETF for gold. Stocks will not have 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, such as an index fund, you need other investment tools. Index Funds and ETFs are the most convenient tools provided for traditional investors. Therefore, before Bitcoin's ETF launch, the only single asset ETF was for gold. The introduction of a BTC ETF marks the emergence of the second single asset ETF, which is a natural and opportunistic process. Since people are accustomed to using ETFs to create investment tools, traditional stock market investors can more conveniently invest in alternative assets, such as Crypto.

However, when we value an ETF, we use Net Asset Value (NAV); whereas for a DAT, we use Market Value. These two are completely different concepts. Market Value results in larger price fluctuations, while NAV fluctuates much less. Therefore, as a single investment tool for Crypto, I believe the DAT approach is better.

Better Liquidity

The biggest advantage of DAT over ETF is its superior liquidity, which is the most crucial point of concern for any investor.

My observation is that the smoothest and best way to convert between Crypto and traditional financial assets is through cryptocurrency exchanges. The growth of an ETF comes from creation and redemption, involving three or even more intermediaries, taking 1-2 days for settlement. Clearly, this is not as efficient as completing the transaction through a distributed ledger, which may only take 2 minutes or 10 minutes. Therefore, transactional methods may be the primary way for the future conversion between traditional finance and crypto assets, making better liquidity a core advantage of DAT over ETF.

Greater Price Elasticity

Moreover, market value offers more suitable price elasticity than NAV. We know that one of the key reasons MicroStrategy has been able to continuously build its financing architecture through various financing tools and hold a large amount of Bitcoin is the significant volatility of BTC itself. Additionally, hedge funds and other alternative investors are willing to invest because they can hold an asset with greater volatility through equity and bond splitting off-exchange, turning the volatility into another tool, both protecting their prices and enabling arbitrage. Especially convertible bonds (CB) are often turned into structured products off-exchange by hedge funds or alternative investment institutions, splitting them. Therefore, these institutions like investing in companies like MicroStrategy, buying its stocks or convertible bonds, as they can perform structured operations on them. Greater price elasticity is also something that ETFs do not possess.

More Appropriate Leverage

Thirdly, it has more appropriate leverage. Previously, single asset investments only had two extremes – either holding BTC or ETH spot, or buying futures or CME contracts. There was a significant gap in between, which allowed listed companies to use a suitably leveraged financing structure by only holding shares, enabling the company to manage a leveraged structure, thereby allowing you to enjoy a premium higher than the price growth of the cryptocurrency itself.

Built-in Downside Protection

Tools like DAT can bring premiums and come with built-in downside protection. Imagine that if the stock price falls more than the asset's net worth, it is equivalent to providing investors with a discounted opportunity to buy BTC or ETH. This kind of market price situation will be quickly smoothed out by the market, making it a good downside protection mechanism in itself. Otherwise, you would prefer to buy stocks, which is akin 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 in the stock market were very suitable for index or basket stock investment strategies back in the day, perhaps DAT is a new trend we will see in the next 3 to 5 years.

The asset size held by DAT may be close to the scale covered by ETFs in the stock market today, maybe in another decade. So, I believe DAT is the most promising new investment tool 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.