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

2025-08-29 22:10:38

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DAT may be the best way for crypto assets to move from Onchain to OffChain.

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 on-site shorthand with some 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 stock trading. So, is this type of investment tool more suitable in the form of an ETF, or in the form of a DAT (Digital Asset Treasury)?

My personal conclusion is that perhaps the DAT model is like the revolution of a new financial tool, just as when ETFs first emerged.

We know that stocks transitioned from individual stocks traded on stock exchanges to the emergence of index funds, and then ETFs based on index funds. The innovation of financial instruments has brought about a significant new asset class. Crypto moves from on-chain to off-chain, through the stock market, in a way that 99% of people can easily accept, allowing all stock market investors to easily and habitually access crypto assets. So which method is better? Is it the ETF method or the DAT method?

My personal view is that DAT 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 and single asset investment tool in the global capital market is the gold ETF. There will not be a single stock ETF 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, before the single asset ETF, there was only gold, and after the launch of the BTC ETF, we began to have a second single asset ETF. This is a natural and trend-following process because people are accustomed to using ETFs to create investment tools, making it easier for traditional stock market investors to invest in alternative assets like crypto.

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 can lead to greater price volatility, while net asset value fluctuates much less. Therefore, as a single investment tool for crypto, I believe the better option should be the DAT model.

Better Liquidity

The biggest 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 exchanges. The growth of ETF scale comes from subscriptions and redemptions, requiring the involvement of three or more intermediaries, taking 1-2 days to complete the settlement. Clearly, this is not as efficient as completing the conversion through trading on a distributed ledger, which may only take 2 minutes or 10 minutes. Therefore, the trading method may become the main way to convert between traditional finance and crypto assets in the future, so better liquidity is a core advantage of DAT over ETFs.

Better Price Elasticity

At the same time, market value has more appropriate price elasticity than net asset value. We know that the reason MicroStrategy can continuously build its financing structure through various financing tools and hold a large amount of Bitcoin is largely due to the high volatility of BTC itself. Additionally, the reason hedge funds and other alternative investors are willing to invest is precisely because they can hold a more volatile asset through shares, splitting equity and bonds in the over-the-counter market, turning volatility into another tool that protects their price and allows for arbitrage. Especially with convertible bonds (CB), which are often structured by hedge funds or alternative investment institutions in the over-the-counter 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.

More Appropriate Leverage

Third, it has a more appropriate leverage. Originally, single asset investments had only two extremes—either holding BTC or ETH spot, or buying futures or CME contracts. There is a significant gap in between, which allows listed companies to design appropriate leveraged financing structures. You only need to hold the stock, and the company manages the leveraged structure, allowing you to enjoy a premium that is higher than the price growth of the cryptocurrency itself.

Built-in Downside Protection

Tools like DAT can provide a premium and come with built-in downside protection. Imagine if the stock price drops below the asset's net value, it essentially offers investors a discounted opportunity to buy BTC or ETH. This market price situation will quickly be corrected by the market, so it itself serves as a good downside protection. Otherwise, you would rather buy stocks, which is equivalent 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 then, perhaps DAT is a new trend we will see in the next 3 to 5 years.

The asset scale held by DAT may approach the scale currently covered by stock market ETFs, perhaps given another ten years. Therefore, 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.

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