Crypto VCs Take a $2 Trillion Narrative to Wall Street

The Emerging Trend of Crypto Reserve Companies

The spotlight in the US stock market has shifted from artificial intelligence to a surge of companies undergoing fundamental transformations. Recently, the US capital markets have witnessed an unprecedented boom in reverse acquisitions.

Publicly traded companies are abandoning their original core businesses and pivoting to cryptocurrency as their foundation, causing share prices to skyrocket—sometimes multiplying several-fold, or even dozens of times, in a short window. The US stock market has truly become a testing ground for financial innovation in crypto. This time, crypto venture capital firms have successfully captured Wall Street’s attention.

In the US Stock Market, the 'Firestarter' Ignites DAT Fireworks

When Primitive Ventures invested in Sharplink just a few months ago, they couldn’t have foreseen how quickly this new crypto track would become crowded in the US stock market. “Back then, hardly anyone was discussing these investment cases—it was nothing like the current market frenzy. But it really only took a month or two,” said Primitive partner Yetta.

Sharplink Gaming completed a $425 million funding round, becoming the first Ethereum reserve company on the US stock market. After the announcement, its stock price soared—at one point climbing more than tenfold. As the only China-based investment fund participating in this deal, Primitive attracted significant attention across the community.

“We saw that crypto market liquidity was weak, but institutional buying power was extremely strong. Bitcoin ETF volumes have remained robust, and open interest in Bitcoin options on major derivatives exchanges has even surpassed that of some large spot platforms,” they explained. In an internal strategy review, Primitive set a new investment direction focused on the convergence of CeFi (centralized finance) and DeFi (decentralized finance). Since then, they’ve become one of the most active VCs in the crypto space.

Primitive now receives daily invitations from investment banks to participate in crypto reserve company deals. In this investment wave, banks serve as intermediaries—connecting projects with investors and organizing roadshows for capital providers.

Over the past few months, Primitive has reviewed at least 20 crypto reserve projects. Publicly, though, they’ve only invested in Sharplink and MEI Pharma, which focuses on Litecoin reserves. Their cautious approach reflects concerns about market overheating; the team has been closely tracking indicators for signs of a peak.

“We do feel the market bubble is much larger now than in previous cycles,” Yetta noted. The team now prepares regular market reports and refines exit strategies as conditions evolve. “Crypto reserve companies are a financial innovation; you can stay long-term bullish on their underlying assets, but there’s also a real risk of severe deleveraging or a bursting bubble when the market turns.”

Pantera’s New Direction: The DAT Fund

Unlike Primitive’s caution, Pantera is diving in headfirst. This veteran crypto VC, with 12 years in the industry, even coined a new term for this space—DAT (Digital Asset Treasury)—and launched a specialized fund for it.

In a fundraising memo, Pantera partner Cosmo Jiang wrote: “It’s rare as an investor to stand at the birth of a new asset class. Recognizing this and moving quickly to seize early opportunities is critical.”

Pantera’s pitch to investors is simple: if a company increases the amount of Bitcoin it holds per share each year, owning its stock means you’re getting more and more Bitcoin exposure.

The playbook for Bitcoin reserve companies, pioneered by MicroStrategy and others, is to raise capital through targeted issuances, convertible bonds, preferred shares, and similar instruments when their crypto assets’ value exceeds their market cap—using the stock premium to accumulate more assets at lower cost.

Investors typically use the mNav metric (Market Cap to Net Asset Value) to gauge the premium multiple and financing capability. “The stock market is volatile; sometimes it overvalues certain assets. At those times, issuing financial instruments to raise capital is essentially selling that volatility. In this way, the premium can persist for a long time,” Cosmo explained.

Pantera invested in Defi Development Corps (DFDV), which holds the Solana native token SOL as reserves. This marked the first US-listed company to use a non-Bitcoin cryptocurrency as its reserve asset and saw its share price jump over twentyfold in the months after investment.

For Pantera, this was a true contrarian play—no one else was willing to invest, so Pantera funded nearly the entire $24 million round themselves.

The DFDV team includes veterans from major crypto platforms, and the CFO has operated Solana validator nodes. Their deep crypto expertise and traditional finance experience clinched Pantera’s backing. “We included downside protection in the deal, but DFDV’s breathtaking success was far beyond our expectations.”

Market Catalysts and Rapid Growth

“The true catalyst was the inclusion of major crypto firms in mainstream indices, forcing fund managers worldwide to consider crypto,” noted market observers. Since regulatory sentiment shifted, the crypto sector has made significant inroads into traditional capital markets, drawing global attention to digital assets and tokenization. DAT has become the latest investment buzzword.

After DFDV’s success, other major players moved quickly. Momentum accelerated for Bitcoin reserve companies backed by heavyweight investors, raising roughly $300 million in external funding, with Pantera again as the largest outside backer.

Pantera tapped both its flagship venture and liquid token funds for these investments—originally believing these would be their only plays in the space.

But the market outpaced all expectations. Because of portfolio constraints and concentration limits, Pantera soon established a new dedicated fund.

The DAT Fund quickly raised its $100 million target within days. With overwhelming LP demand, Pantera launched a second DAT Fund; by the next round of interviews, all capital from the first fund had been deployed.

Pantera’s Investment Strategy

In public deals, Pantera frequently serves as the “Anchor” investor, meaning they take the largest stake. Given the thin initial liquidity of DAT companies, shares often trade at a discount. The team’s role is to bring in major investors to stabilize the base and close the pricing gap.

At the same time, being the “Anchor Investor” is a powerful marketing tool for Pantera. “In recent months we’ve received nearly a hundred proposals from DAT companies. We’re usually their first call because we entered early and established a leadership position. They know when we invest, we’re making bold bets and writing big checks.”

Pantera doesn’t, however, invest in every deal. For DAT companies, the fund also values their ability to establish thought leadership in go-to-market strategy. Much of Pantera’s approach is about identifying teams with strong public narrative and market positioning skills.

Key investments have gone to companies led by prominent blockchain figures skilled at building public stories. One example was the reverse acquisition that launched the first Ethereum reserve company, followed by institutional-grade Ethereum fundamentals reports.

The second Ethereum reserve company appeared soon after, with industry experts lending support and making frequent mainstream media appearances. The first company’s stock began to surge, and talk of an “Ethereum arms race” swept the sector.

Keys to DAT Company Success

“To truly open the financial leverage channel, DAT companies must reach at least $1–2 billion in market cap,” explained Cosmo. Only at this scale can they capture valuation premiums and access institutional capital through convertibles or preferred shares.

Before achieving this scale, DATs must tell their story not just to crypto natives, but to mainstream retail investors on the stock market. “People need to buy in and participate. The whole model works only if the market believes it’s real.”

Building lasting market trust is another critical success factor. Traditional finance demands “transparency and discipline”; DAT teams must be sufficiently crypto native while mastering the rigor of listed-company disclosure and regulatory compliance to access US capital markets efficiently and professionally.

“We spend substantial time on due diligence; it’s not about the static mNav number. Is there a clear management structure? Can funding be stabilized? Can they build a new business model? That’s what defines a strong DAT startup team.”

Diversifying Reserve Assets

Beyond Bitcoin, Ethereum, and Solana, Pantera has recently invested in several large-cap altcoin reserve companies. The market narrative now has layers: unlike Bitcoin, DATs for altcoins grow purely through financial engineering; mainstream tokens can generate returns via staking and DeFi; altcoin protocols have mature use cases and income streams, so stock investors can gain exposure to that growth through DATs.

Unlike Bitcoin and major token financing, many altcoin DATs begin with initial reserves directly from their protocol foundations or token holders.

Some strategic reserve companies received their first reserves from major crypto VC firms that pre-purchased tokens. Other strategic DATs were led by protocol foundations, allowing investors to participate directly with tokens or stablecoins.

Liquidity Issues and Insider Trading Concerns

Because of poor liquidity, altcoin DAT shares often surge immediately after financing news, creating trading opportunities for those with early access. In several high-profile cases, the stock jumped days before the official announcement—sometimes quadrupling beforehand.

Several reserve companies backed by prominent investors have faced similar leaks. To prevent early knowledge, teams have bought multiple US shell companies and only revealed the chosen entity at the last minute. Still, leaks sometimes occurred just hours before public disclosure.

Many investors also worry about “left hand/right hand” risks: illiquid, high-priced tokens are hard to liquidate in the crypto market, but once injected into DAT companies, that illiquidity becomes real tradable liquidity on US exchanges.

So whether a DAT is about “growth exposure” or “exit liquidity” remains a question for careful investor analysis. “Many DATs operate in regulatory gray areas, listing on low-threshold boards where it’s hard to ensure robust disclosure and compliance. Without achieving true capital premiums, it just shifts the problem.”

Regulatory Risks

Regulation remains a key risk for DATs. If altcoins and other on-chain assets are classified as securities, DAT structures would require major changes. Still, leading VCs believe this is the best field to play in. “US stock market liquidity is unmatched, and public company investors have greater protection, so DAT investments offer better risk/reward compared to pure crypto,” said industry insiders.

The World Beyond the US Stock Market

Outside the US, the race is on to create the next “MicroStrategy.”

The US stock market is globally recognized as the most efficient, inclusive, and liquid capital market. It’s the premier stage for the next breakout success. But other markets still present opportunities, and investors outside the US are chasing that next big win.

In recent periods, some Asian-listed companies have seen their share premiums spike, delivering more than 10x returns. These stories have made regional arbitrage opportunities more visible.

Asia is emerging as a pioneer for Bitcoin reserves. Over the past year, crypto firms have partnered with financial institutions to invest in Asian-listed companies pursuing Bitcoin acquisition strategies. As the US market cements the trend, plans are underway to target multiple Asian companies for expansion.

“The US market for Bitcoin and major token reserve companies is crowded; future growth will likely come from other capital markets,” said market watchers. This year, investors have jumped on the reserve company bandwagon and reaped swift gains.

Early this year, investors joined dedicated Asian Bitcoin reserve funds; recent deals include Southeast Asian-listed companies that just completed rounds to become the region’s first Bitcoin reserve firms.

Investors have also taken direct stakes in other regional Bitcoin reserve projects, usually in the seven-figure USD range. For example, Latin America saw its first Bitcoin reserve company close an acquisition, backed by major financial institutions and large initial raises.

“Markets like Japan, South Korea, India, and Australia still have room for Bitcoin reserve companies,” noted observers. After joining focused funds, many have shifted from passive limited partners to active participants, evaluating deals alongside peers. The focus now is on finding listed companies open to acquisition; Asian shell companies are a hot topic in meetings.

The Race Against Time

First-mover advantage is everything outside the US. Early action not only secures market share but also attracts investor attention. But this makes arbitrage plays for Bitcoin reserve companies a race against time.

Shell company deals vary greatly—some are affordable, while others require much larger commitments from multiple buyers.

From acquisition to listing and trading, the process typically takes 1–3 months, mainly depending on regulatory approval speed. But from deal sourcing to completion, it generally takes at least six months or more.

Several major acquisitions in the region have taken nearly a year. The lead investors in these deals have also driven other major successes.

Recently, leading firms executed deals in other Asian markets. “Asian capital markets, especially in Southeast Asia, are relatively closed, but trading volumes are massive; many foreign investors are simply unaware of the activity,” noted regional experts.

“Everyone is racing the clock, but in Asia, few can compete with the top firms,” said observers. Local regulation is a huge barrier for foreign capital; most VCs lack acquisition and regulatory experience, and don’t truly understand the Asian landscape.

Leading firms are bringing in local partners to connect with exchanges and regulators, speeding up deal execution. In some Asian markets, teams have closed deals in less than a month—setting records for deal speed.

Financing Strategies in Asia

Financing pace and market strategy are additional barriers. “mNav is a late-stage valuation metric; it only matters when crypto assets hit critical mass. Early-stage companies have entirely different strategy and premium logic than incumbents.” In the US, equity structures like super voting rights allow DAT teams to retain control while diluting ownership.

Asian-listed companies generally lack such mechanisms, so their dilution capacity is limited. Teams must time fundraising precisely and use core business cash flows to buy back shares, achieving reverse dilution. Several Asian DATs have already obtained local licenses and will soon launch crypto-related operations.

Currently, leading firms are closing acquisition deals across Asian markets and advancing Bitcoin reserve plays in multiple regions. In recent months, teams have acquired significant stakes in Asian-listed companies, soon to be renamed to reflect their new focus. “Our goal is to create several success stories in Asia, then roll them up under a US-listed parent, giving US investors indirect access to the Asian premium.”

Firms have also participated in other acquisitions and are close to completing initial funding rounds. The preferred model remains “multiple players plus small funds,” with total fundraising under $10 million and a six-month lockup.

Management wants portfolio companies to hold significant stakes in Asian firms and large Bitcoin reserves, creating a differentiated narrative for investors. Of course, these are only plans and projections; whether the Asian premium is sustainable and if US investors will embrace the Asian story depends on market results over time.

“The Asian market has a high floor but a low ceiling; real scale can only be achieved on US exchanges, which draw global investors and players,” said analysts. While investors may chase alpha in Bitcoin reserve narratives worldwide, everyone agrees that the underlying beta—the foundation for growth—still derives from the US’s favorable regulatory climate.

“If national Bitcoin reserve legislation is truly enacted, government purchases will spur other regions and sovereign funds to follow, and Bitcoin could continue to appreciate,” noted observers.

Saved by ‘Coin Stocks’

Compared to the stagnant crypto market, the DAT sector is buzzing. This wave not only draws attention—it’s become a lifeline for capital stuck in crypto. “Many of the largest crypto projects by market cap are now considering DATs,” participants report.

Many crypto VC funds are at a crossroads as they seek to launch new rounds, but weak metrics have left LPs wary. Several funds have quietly shut down in recent months.

Since 2022, private market crypto valuations have become inflated; many projects raised tens of millions in seed rounds, but few delivered genuine innovation. With the rise of crypto ETFs and FinTech, venture capital is a tougher sell for LPs allocating to crypto.

Meanwhile, shrinking liquidity has made exits harder. Retail investors are no longer buying “VC tokens,” and projects must pay steep listing fees to go public. “Listing on a top exchange often means giving up at least 5% of tokens—on a $100 million valuation, that’s $5 million. Buying a US shell company costs about the same.”

Yet the US’s open regulatory environment has renewed hope. Crypto reserve companies offer not only the best exit channels for tokens, but also a new story to attract institutional capital into crypto.

Mid-market investment banks have also benefited. Market reports say DAT-related trading now takes up a large share of many brokers’ workload, and deal flow in this area is expected to surge.

The industry is now working to bring the $2 trillion crypto market into the US stock market. In a short period, dozens of DAT companies have gone public.

Industry watchers expect a major consolidation in DAT within years. When a downturn comes, small DATs unable to scale will fall into negative premium traps and be scooped up by larger rivals at fire-sale prices. “DAT is a new financial-asset model testbed, not a tech innovation center. Ultimately, only a few will survive.”

But for now, the music has just started. Experts expect several months before the true competitive race begins. “Who will win is anyone’s guess; all we can do is back the teams we believe can be long-term survivors.”

FAQ

What is crypto venture capital (Crypto VCs)? What are their main investment focuses?

Crypto VCs are venture funds specializing in blockchain and cryptography. They invest in innovative protocols, DeFi, NFTs, and Web3 infrastructure with high growth potential—seeking transformative projects that can reshape the digital market.

Why is the crypto market called a $2 trillion market? How is this figure calculated?

The crypto market is valued at $2 trillion based on total market capitalization, calculated by multiplying each cryptocurrency’s current price by its circulating supply. This number consolidates all digital asset valuations into one global indicator.

How do crypto VC investments enter mainstream Wall Street markets? What are the opportunities and challenges?

Accessing Wall Street provides massive institutional capital and regulatory legitimacy—fueling adoption. The main challenges are strict compliance, volatility, and integration with legacy financial systems. Asset tokenization and strategic partnerships unlock exponential growth opportunities.

Who are the leading crypto VC institutions? How do they influence the market?

Major players include a16z, Multicoin Capital, Paradigm, Mechanism Capital, Polychain, and Variant Fund. These VCs shape the global crypto ecosystem by driving investments and accelerating the development of pioneering projects.

What types of projects do crypto VCs fund? What are the prospects for DeFi, NFT, and Layer2?

VCs invest in DeFi, NFT, Layer2, and core blockchain infrastructure. DeFi is set for institutional adoption, NFTs will expand beyond art, and Layer2 solutions will revolutionize scalability and transaction throughput.

How does traditional Wall Street view crypto VCs? Does this imply industry centralization?

Traditional Wall Street remains cautious but increasingly engaged with crypto. Financial institutions are starting to participate actively, signaling mainstream potential. Rising trading volumes show growing institutional acceptance and gradual integration with global finance.