Small public companies snap up ether in new crypto gold rush, even as risks linger
Corporate treasuries held at least 966,304 ether tokens on their balance sheets at the end of July, worth nearly $3.5 billion, according to a Reuters analysis of regulatory filings and disclosures. That compares with just under 116,000 at the end of 2024.
The second-largest cryptocurrency has become the token of choice for those looking for more active returns. Unlike bitcoin, which solely relies on price appreciation, ether can be used in staking, a practice where holders lock up their tokens to support the ethereum network in exchange for rewards.
Staking can offer yields of about 3% to 4%.
"Ether balances growth potential with the legitimacy of a blue-chip asset. It is large enough to be institutional-grade, yet early enough in adoption to benefit from future upside," said Sam Tabar, CEO of Bit Digital (BTBT.O), opens new tab, which has ether on its balance sheet.
The cryptocurrency also powers the ethereum blockchain, which supports a wide range of applications including lending platforms, trading protocols and stablecoins, making it a core component of the crypto financial system.
"Holding ether is more like owning oil, whereas bitcoin is more one-dimensional, like gold. Ether is the foundation of decentralized finance, not just a pure store of value," said Anthony Georgiades, general partner at VC firm Innovating Capital.
Still, challenges such as regulatory uncertainty and price volatility, which affect the assets' fair value, continue to hinder adoption.
After disclosing plans to accumulate ether earlier this year, shares of Peter Thiel-backed BitMine and gaming media network GameSquare (GAME.O), opens new tab jumped as much as 3,679% and 123%, respectively, underscoring how eager investors are to chase crypto-linked momentum.
But analysts have cautioned against unfettered optimism.
"The share price response has the hallmarks of the meme craze," said Dan Coatsworth, investment analyst at AJ Bell.
The inherent volatility of crypto tokens also makes it a poor fit for boards with a low risk appetite, which could curb ether's appeal beyond core industry players.
"Most CFOs would not swap liquid cash for ether. It remains a niche tool best left to 'tech-forward' treasuries that can tolerate swings and complexity," said Anuj Karnik, founder and managing director at Straitsberg, a Singapore-based treasury advisory firm.
"Treasury best-practice values liquidity, predictability and regulatory certainty above all. Most corporate leaders view crypto holdings today as experimental 'alternative' allocations, not mainstream policy."
Also, while the Securities and Exchange Commission has softened its stance on staking activities, the regulatory framework around the practice is still evolving.
Key questions include whether rewards should be taxed as income, how to treat locked tokens on balance sheets and whether offering staking services could trigger custodial obligations.
"Every staking reward could be landing in a compliance gray zone," said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.
Still, despite the risks, some companies continue to double down, raising capital through share sales or debt offerings to fund their ether purchases.
BitMine sold a $182 million stake to Cathie Wood's ARK Invest in July. GameSquare CEO Justin Kenna also told Reuters his company might sell stock to invest in ether.
"We're not in the business of being overly dilutive. But we'll continue to be opportunistic," Kenna said.
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