Normalization of digital asset treasuries is poised to become a significant business trend.

The era of chaos for companies in the crypto space is coming to a close as DATs transition into a phase of stability, according to Jolie Kahn of AVAX One.

For a short period, the digital asset treasury (DAT) captured the attention of Wall Street.

However, by 2026, the initial excitement has faded.

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The appeal of the “passive accumulator” has diminished, and rightfully so. Investors have come to understand that merely declaring a bitcoin acquisition is no longer a guaranteed formula for stock value increase. The period of easy profits has concluded.

Nonetheless, this cooling phase does not signify failure; it represents a reckoning. It is removing the facade to expose a stark reality: Numerous publicly traded companies are striving to reinvent themselves as unregulated hedge funds—frequently lacking the risk management practices of a fund or the governance standards expected of a public entity.

The strategy was alarmingly straightforward: secure funding, acquire cryptocurrency, and hope for value increase.

However, as a securities attorney and CEO with experience managing over $5 billion in capital raises, including serving as the General Counsel for MARA Holdings during its ascent to a $6 billion valuation, I recognize that accumulation alone is not a viable business approach. It is a gamble. And as annual reporting deadlines approach, the consequences of those decisions are becoming evident.

For the DAT sector to evolve beyond speculative excitement and earn recognition as a trustworthy fintech approach, governance must not be viewed as an afterthought. It should be a cornerstone.

The risk of the “blind buy”

The current DAT model has been characterized by a singular directive: acquire funds, purchase assets, retain. While this may function in a bull market, it leaves shareholders vulnerable to severe losses during bear markets or periods of volatility, as has been recently observed.

In the absence of a clear, defined strategy outlining the rationale for selecting specific assets or managing liquidity, these companies are effectively wagering shareholder value. Both retail and institutional investors are increasingly demanding more substantive answers. They are no longer content with “we believe in crypto.” They seek to understand: How are you managing capital allocation? What specific risks are associated with the protocols you are investing in, and what risk mitigation strategies are in place? If the current strategy falters, do you have an alternative plan?

A significant number of current reports submitted by DATs appear to present generic boilerplate risk factors. They tend to reiterate cautions about volatility and hacking but neglect to address the unique risks tied to their specific treasury assets. This is where the emerging generation of DATs must differentiate themselves to remain viable and competitive.

Using the annual report as a storytelling tool

As reporting deadlines approach, management and legal counsel at DATs need to overhaul their submissions. For example, the Risk Factor section of a 10-K should not merely repeat every risk factor previously documented on EDGAR, the SEC’s primary digital database; it should offer a thoughtful evaluation of realistic short- and long-term risks, specifically pertaining to the issuer’s current business activities.

A mature DAT must go beyond the fundamentals and transparently convey the trade-offs involved. Investors have the right to know why a dollar is allocated to AVAX (or BTC) instead of research and development or marketing, as well as how the company generates reliable revenue streams outside of asset appreciation to sustain operations during challenging market conditions. Additionally, companies must reveal the specific safeguards and controls implemented to prevent the treasury from becoming a single point of failure.

The “governance alpha”

The next generation of successful DATs will be distinguished by their governance frameworks. This is not solely about regulatory compliance; it encompasses shareholder confidence and the upholding of fiduciary responsibilities.

We experienced this at AVAX One. We acknowledged that simply announcing a transition to a DAT model was insufficient, which necessitated approaching our shareholders—the genuine owners of the capital—and seeking their explicit approval for our digital asset strategy.

The outcome was revealing. More than 96% of voting shareholders endorsed the transition. This was not merely a vote for another crypto treasury. It was a mandate for a governance framework in the crypto space.

It granted us an operational license that “blind buy” DATs do not possess, and we intend to leverage that mandate to advance fintech through the Avalanche ecosystem.

The regulatory shield

Lastly, the SEC and the broader regulatory environment cannot be overlooked. While many within the industry perceive regulation as an obstacle, for a public DAT, it serves as a crucial and appreciated safeguard.

SEC disclosure requirements impose a level of transparency that shields shareholders from the most extreme risks of the crypto market. It is a potent instrument that allows public DATs to set themselves apart from non-transparent private entities.

By embracing these obligations rather than merely fulfilling the minimum requirements, we establish a credibility advantage and provide verifiable actions and safety assurances.

We are entering a new era. The chaotic days of treasury management are concluding. The market will promptly penalize those who merely collect cryptocurrencies and reward those who are constructing sustainable, well-governed financial structures.

Your annual report is your ultimate project, and market response is your evaluation. Ensure that you have completed your assignments.