Latest news with #NicCarter
Axios
03-06-2025
- Business
- Axios
Digital asset treasuries: financial alchemy meets bitcoin
A number of public companies have recently made moves into acquiring bitcoin, and it's easy to see why — the market's been handsomely rewarding businesses that buy up digital assets. Why it matters: Digital asset treasury companies (DATs) are on the rise, giving investors an easy way to take leveraged bets on an inflection point for cryptocurrencies. The giant risk they pack just may be hard to see now when times are good. How it works: The core idea driving DAT investment philosophy is to trade an inflationary asset (dollars) for a scarce asset (cryptocurrency), particularly one believed to be catching on. The pitch to investors is that DATs are a better buy than a crypto-based exchange-traded fund because they'll grow holdings per share. ETFs, by contrast, simply buy and sell bitcoin (or other assets) as investors buy and sell the ETF. In short: If a DAT company's share represented, say, 1 bitcoin at purchase, it might be worth 1.5 in a couple years. Or that's the theory. Investors have been buying in Strategy (aka MicroStrategy, trading under MSTR), the leader in the DAT movement, has been trading at twice the value of its bitcoin holdings and its underlying business, according to analysis by VanEck. The company pioneered the notion of BTC yield — the rate at which BTC per share grows — and is targeting a rate of 4 to 8%. " Purchases into these vehicles effectively lock supply away, with a low likelihood of being sold because these are effectively one-way closed-end funds," Cosmo Jiang, of Pantera Capital, wrote in a letter disclosing investments the firm had made that reflect its conviction in this approach. The big picture: Investment strategies based on leverage — using borrowed capital to boost returns — always look great when prices are rising. Bitcoin, the biggest of all cryptocurrencies, just set a new all-time high, driven by massive institutional accumulation of the original virtual asset, both in the form of new crypto ETFs and in public companies with DATs. Strategy itself holds 580,250 bitcoin, 2.8% of all the maximum supply, a chunk currently worth about $60 billion. Risks hiding in plain sight But leveraged bets also carry risks, going up faster in good times, but dropping faster when things fall. And as we know, crypto does have a tendency to take a sharp turn for the worse from time to time, especially when buyers get swept up in hype around a trade that seems too good to be true. What they're saying: "Your fundamental premise here is 'sometimes people will buy $1 for $1.5 for no apparent reason [and] we think this can last forever,'" Nic Carter, partner at Castle Island Ventures, said of the DAT trend on social media. Carter compared it to another investment from the days before crypto ETFs, when the former premium on Grayscale's bitcoin trust — which traded for a long time above its notional value — eventually fell to a discount. Threat level: A big enough downturn in crypto prices, and a resulting drop in a DAT company's shares, could start a vicious cycle. For example, take Strategy. It's been financing its bitcoin purchases with zero-coupon convertible notes. Investors have essentially been lending it free money based on the expectation that they'll make out handsomely by converting the notes into sky-high Strategy shares down the road, and make money on the stock's short-term fluctuations along the way. But if bitcoin prices fall, and a DAT's stock doesn't perform, bond investors could instead demand their money back — in dollars — at the end of the term. Zoom in: This could present a problem. For many DAT companies, cash flow is scarce, and their crypto holdings are their most valuable assets. A prolonged downturn could force them to sell some of their crypto to repay their borrowings, which would accelerate a drop in crypto prices — perhaps enough to put the whole crypto market into bear mode again. State of play: Equity buyers should beware of the fact that most of the DAT firms have been engaging in flavors of financial alchemy. In Asia, a former hotel company reported a 225% yield on its bitcoin treasury holdings, which now total 8,888. MARA, the Bitcoin miner, has moved in as well. Cantor Fitzgerald, SoftBank and the stablecoin giant Tether backed a firm called Twenty One with 42,000 BTC (valued at $3.6 billion), and it aims to do the same. Other cryptocurrencies are getting brought in on the act, too. A few companies have announced the same strategy for solana, including Upexi, SOL Strategies and DeFi Development Corp. Just Monday, an ed tech company announced plans to raise $500 million with convertibles to build a solana treasury. What we're watching: The best positioned firms will be the ones that accumulated in the bad times.
Yahoo
24-05-2025
- Business
- Yahoo
Strategy Slumps 6%, Leading Crypto Names Lower as Bitcoin Treasury Strategies Are Questioned
Crypto stocks suffered a red day on Friday, especially bitcoin BTC treasury companies such as Strategy (MSTR) and Semler Scientific (SMLR) — each down roughly 6% even as bitcoin slipped only a bit more than 2%. Japan-listed Metaplanet is lower by 24%. The picture looks even worse when zooming out: changing hands at $376 early Friday afternoon, MSTR shares are more than 30% below their all-time high hit late in 2024 even as bitcoin has pumped to a new record this week. The price action comes amid a continuing debate taking place on social media about the sustainability of Michael Saylor's (and those copycatting him) bitcoin-vacuuming playbook. 'Bitcoin treasury companies are all the rage this week. MSTR, Metaplanet, Twenty One, Nakamoto,' said modestly well-followed bitcoin twitter poster lowstrife. 'I think they're toxic leverage is the worst thing which has ever happened to bitcoin [and] what bitcoin stands for.' The issue, according to lowstrife, is that the financial engineering that Strategy and other BTC treasury firms are employing to accumulate more bitcoin essentially rests on mNAV — a metric that compares a company's valuation to its net asset value (in these cases, their bitcoin treasuries). As long as their mNAV remains above 1.0, a given company can keep raising capital and buying more bitcoin, because investors are showing interest in paying a premium for exposure to the stock relative to the firm's bitcoin holdings. If mNAV dips below that level, however, it means the value of the company is even lower than the value of its holdings. This can create significant problems for a firm's ability to raise capital and, say, pay dividends on some of the convertible notes or preferred stock it may have issued. Shades of GBTC Something similar happened to Grayscale's bitcoin trust, GBTC, prior to its conversion into an ETF. A closed-end fund, GBTC during the bull market of 2020 and 2021 traded at an ever-growing premium to its net asset value as institutional investors sought quick exposure to bitcoin. When prices turned south, however, that premium morphed into an abysmal discount, which contributed to a chain of blowups beginning with highly-leverage Three Arrows Capital and eventually spreading to FTX. The resultant selling pressure took bitcoin from a record high of $69,000 all the way down to $15,000 in just one year. 'Just like GBTC back in the day, the entire game now — the whole thing — is figuring out how much more BTC these access vehicles will scoop up, and when they will blow up and spit it all back out again,' Nic Carter, partner at Castle Island Ventures, posted in response to lowstrife's thread. The thread also triggered replies from MSTR bulls, among them Adam Back, Bitcoin OG and CEO of Blockstream. 'If mNAV < 1.0 they can sell BTC and buy back MSTR and increase BTC/share that way, which is in share-holder interests,' he posted. 'Or people see that coming and don't let it go there. Either way this is fine." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
07-05-2025
- Business
- Yahoo
Trump crypto ventures loom over Senate stablecoin vote
President Trump's recent cryptocurrency dealings are casting a shadow over efforts to pass legislation for the industry at a key moment, as the Senate gears up to vote on a stablecoin bill Thursday. Senate leadership is preparing to hold a vote on the GENIUS Act, which would create a regulatory framework for payment stablecoins. However, a contingent of crypto-friendly Democrats have threatened to vote it down, accusing Republicans of prematurely cutting off negotiations over the bipartisan bill. The showdown over the stablecoin bill comes as the Trump family's growing portfolio of crypto projects fuel the legislation's opponents, who argue it will allow the president and his family to profit from the industry. Crypto investors and advocates who were elated by Trump's moves to bolster the industry are now growing concerned. 'Trump's not helping himself,' said Nic Carter, a founding partner at crypto investment firm Castle Island Ventures, adding, 'Everyone I know in crypto is very frustrated by this. It's like a completely unnecessary own goal.' Trump's close ties to the crypto industry have raised concerns since before he took office. As the president embraced digital assets on the campaign trail last fall, he and his sons launched their own crypto venture, World Liberty Financial. And shortly before his inauguration, the president and first lady Melania Trump launched meme coins. Both World Liberty Financial and the president's meme coin have drawn scrutiny once again in recent weeks. Trump is set to attend a dinner with the top investors in his meme coin later this month. The announcement in April, which encouraged participants to 'hold as much $TRUMP as you can,' caused the price of the token to spike 60 percent. World Liberty Financial also announced last week that Emirati firm MGX would be using the company's brand-new stablecoin to conduct a $2 billion transaction with crypto exchange Binance. Democrats have decried the moves as efforts by the president and his family to enrich themselves, calling for ethics investigations into both the meme coin dinner and the World Liberty Financial. They argue that the meme coin and stablecoin can be used by Trump to improperly profit off his office and by outside actors, including foreign actors, to attempt to buy influence with the president. The Trump family owns a 60 percent stake in World Liberty Financial, and a company affiliated with the family receives 75 percent of the revenue collected from its coin sales. The White House has previously downplayed concerns about potential conflicts of interest between Trump and his family crypto businesses, saying the president uses a blind trust to avoid improprieties. The growing scrutiny surrounding the president and his family's crypto dealings is threatening to upend his administration's efforts to pass long sought legislation providing the industry with greater regulatory clarity. The administration and Republican lawmakers have repeatedly said they hope to pass both stablecoin and market structure legislation by August. Stablecoin legislation appeared to be sailing forward, with versions passing out of both the Senate Banking Committee and House Financial Services Committee earlier this year. However, progress came to a screeching halt last week. After Senate Majority Leader John Thune (R-S.D.) moved Thursday to expedite a vote on the GENIUS Act, nine Democrats who had previously backed the upper chamber's stablecoin bill pulled their support. The group, which included four senators who voted to advance the bill out of committee in March, said Saturday that the floor text put forward by Republicans lacked sufficiently strong provisions on anti-money laundering and national security, among other issues. Sen. Ruben Gallego (D-Ariz.), the top Democrat on the Senate Banking Digital Assets Subcommittee, accused Republicans of attempting to force through the legislation without further negotiations. 'All of a sudden, the language changed,' he told MeidasTouch in an interview recorded Tuesday. 'They backtracked on some of the stuff we had already approved. They weren't even moving forward with further legislation. And then they announced the date of the first vote.' 'I think the purpose of that was really to put Democrats in a bad position and force us to vote for it,' he continued. 'You can't throw us in the corner,' Gallego added. 'You can't try to f‑‑‑ us and then say like, 'Hey, deal with it.' That's just not going to work, especially when you still need our votes no matter what.' Thune signaled an openness to making changes sought by Democrats on Tuesday but also appeared intent on moving the GENIUS Act forward despite recent pushback. He underscored the months-long process that had gone into the legislation. 'My question is — when will the Democrats take yes for an answer?' Thune said at a press conference. 'If they have other suggestions and things that they want incorporated into the draft, we are certain welcome to taking a look at and working with them on that. But we need to start moving forward.' 'This is a piece of legislation that has broad bipartisan support,' he added. 'I think if we get it on the floor, it could get a really good vote from both Republicans and Democrats. But we've got to get it there.' Senate Minority Leader Chuck Schumer (D-N.Y.) noted the two sides are engaged in discussions. 'Look, we all know the level of corruption in the Trump administration is higher than any administration probably in American history,' he said Tuesday at a presser. 'But on stablecoins, Democrats and Republicans are talking to each other.' Meanwhile, opponents of the GENIUS Act pointed to the World Liberty Financial deal in urging lawmakers to vote against the stablecoin bill. The deal was announced the same day Thune moved to fast-track the legislation. 'A shady fund backed by a foreign government just announced it will make a $2 billion deal using Donald Trump's stablecoins,' Sen. Elizabeth Warren (D-Mass.) said in a statement. 'Meanwhile, the Senate is gearing up to pass the 'GENIUS' Act – stablecoin legislation that will make it easier for the President and his family to line their own pockets. This is corruption and no senator should support it,' she added. Concerns about Trump's crypto moves have also spilled over to the House side, prompting Democrats to walk out of a hearing on market structure legislation Tuesday. Rep. Maxine Waters (D-Calif.), ranking member on the House Financial Services Committee, objected to the joint hearing between the panel and the House Agriculture Committee. She sought to block the hearing from moving forward, taking advantage of the need for unanimous consent. Republicans and some Democrats ultimately proceeded with a more informal roundtable, while Waters and several other Democrats left to hold a separate hearing on Trump's crypto ties. 'I, in good faith, could not provide my consent because our Republican colleagues refuse to address the unprecedented conflicts of interest presented by President Donald Trump and his family,' Waters said. Carter noted the problems plaguing stablecoin legislation could spell trouble for more complicated market structure legislation. 'Even something as apparently uncontroversial as the stablecoin bill, which has been bipartisan, if that's not moving forward, I think it would be an extreme long-shot that we could expect anything on market structure,' he told The Hill. 'Virtually everyone I know in crypto wished that Trump had just executed on his crypto platform and then not done anything else,' he added. 'Right now, it's like they're hugging us to death.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. For the latest news, weather, sports, and streaming video, head to The Hill.
The Hill
07-05-2025
- Business
- The Hill
Trump's crypto problem
Senate leadership is preparing to hold a vote on the GENIUS Act, which would create a regulatory framework for payment stablecoins. However, a contingent of crypto-friendly Democrats have threatened to vote it down, accusing Republicans of prematurely cutting off negotiations over the bipartisan bill. The showdown over the stablecoin bill comes as the Trump family's growing portfolio of crypto projects fuel the legislation's opponents, who argue it will allow the president and his family to profit from the industry. Crypto investors and advocates who were elated by Trump's moves to bolster the industry are now growing concerned. ' Trump's not helping himself,' said Nic Carter, a founding partner at crypto investment firm Castle Island Ventures, adding, 'Everyone I know in crypto is very frustrated by this. It's like a completely unnecessary own goal.' Trump's close ties to the crypto industry have raised concerns since before he took office. As the president embraced digital assets on the campaign trail last fall, he and his sons launched their own crypto venture, World Liberty Financial. And shortly before his inauguration, the president and first lady Melania Trump launched meme coins. Both World Liberty Financial and the president's meme coin have drawn scrutiny once again in recent weeks. Trump is set to attend a dinner with the top investors in his meme coin later this month. The announcement in April, which encouraged participants to 'hold as much $TRUMP as you can,' caused the price of the token to spike 60 percent. World Liberty Financial also announced last week that Emirati firm MGX would be using the company's brand-new stablecoin to conduct a $2 billion transaction with crypto exchange Binance. Democrats have decried the moves as efforts by the president and his family to enrich themselves, calling for ethics investigations into both the meme coin dinner and the World Liberty Financial. They argue that the meme coin and stablecoin can be used by Trump to improperly profit off his office and by outside actors, including foreign actors, to attempt to buy influence with the president. The Trump family owns a 60 percent stake in World Liberty Financial, and a company affiliated with the family receives 75 percent of the revenue collected from its coin sales. The White House has previously downplayed concerns about potential conflicts of interest between Trump and his family crypto businesses, saying the president uses a blind trust to avoid improprieties. The growing scrutiny surrounding the president and his family's crypto dealings is threatening to upend his administration's efforts to pass long sought legislation providing the industry with greater regulatory clarity.
The Hill
07-05-2025
- Business
- The Hill
Trump crypto ventures loom over Senate stablecoin vote
President Trump's recent cryptocurrency dealings are casting a shadow over efforts to pass legislation for the industry at a key moment, as the Senate gears up to vote on a stablecoin bill Thursday. Senate leadership is preparing to bring the GENIUS Act, which would create a regulatory framework for payment stablecoins, to the floor. However, a contingent of crypto-friendly Democrats have threatened to vote it down, as they accuse Republicans of cutting off negotiations prematurely. At the same time, Trump's growing crypto ties are giving new fuel to the legislation's opponents, who argue it will allow the president and his family to profit from the industry. 'Trump's not helping himself,' said Nic Carter, a founding partner at crypto investment firm Castle Island Ventures, adding, 'Everyone I know in crypto is very frustrated by this. It's like a completely unnecessary own goal.' Trump's close ties to the crypto industry have raised concerns since before he took office. As the president embraced digital assets on the campaign trail last fall, he and his sons launched their own crypto venture, World Liberty Financial. And shortly before his inauguration, Trump and his wife Melania launch meme coins. Both World Liberty Financial and the president's meme coin have drawn scrutiny once again in recent weeks. Trump is set to attend a dinner with the top investors in his meme coin later this month. The announcement in April, which encouraged participants to 'hold as much $TRUMP as you can,' caused the price of the token to spike 60 percent. World Liberty Financial also announced last week that Emirati firm MGX would be using the company's brand-new stablecoin to conduct a $2 billion transaction with crypto exchange Binance. Democrats have decried the moves as efforts by the president and his family to enrich themselves, calling for ethics investigations into both the meme coin dinner and the World Liberty Financial. They argue that the meme coin and stablecoin can be used by Trump to improperly profit off his office and by outside actors, including foreign actors, to attempt to buy influence with the president. The Trump family owns a 60 percent stake in World Liberty Financial, and a company affiliated with the family receives 75 percent of the revenue collected from its coin sales. The growing scrutiny surrounding the president and his family's crypto dealings is threatening to upend his administration's efforts to pass long sought legislation providing the industry with greater regulatory clarity. The administration and Republican lawmakers have repeatedly said they hope to pass both stablecoin and market structure legislation by August. Stablecoin legislation appeared to be sailing forward, with versions passing out of both the Senate Banking Committee and House Financial Services Committee earlier this year. However, progress came to a screeching halt last week. After Senate Majority Leader John Thune (R-S.D.) moved Thursday to expedite a vote on the GENIUS Act, nine Democrats who had previously backed the upper chamber's stablecoin bill pulled their support. The group, which included four senators who voted to advance the bill out of committee in March, said Saturday that the floor text put forward by Republicans lacked sufficiently strong provisions on anti-money laundering and national security, among other issues. Sen. Ruben Gallego (D-Ariz.), the top Democrat on the Senate Banking Digital Assets Subcommittee, accused Republicans of attempting to force through the legislation without further negotiations. 'All of a sudden the language changed,' he told MeidasTouch in a Tuesday interview released Wednesday. 'They backtracked on some of the stuff we had already approved. They weren't even moving forward with further legislation. And then they announced the date of the first vote.' 'I think the purpose of that was really to put Democrats in a bad position and force us to vote for it,' he continued. 'You can't throw us in the corner,' Gallego added. 'You can't try to f— us and then say like, 'Hey, deal with it.' That's just not going to work, especially when you still need our votes no matter what.' Thune signaled an openness to making changes sought by Democrats on Tuesday but also appeared intent on moving the GENIUS Act forward despite recent pushback. He underscored the monthslong process that had gone into the legislation. 'My question is — when will the Democrats take yes for an answer?' Thune said at a press conference. 'If they have other suggestions and things that they want incorporated into the draft, we are certain welcome to taking a look at and working with them on that. But we need to start moving forward.' 'This is a piece of legislation that has broad bipartisan support,' he added. 'I think if we get it on the floor, it could get a really good vote from both Republicans and Democrats. But we've got to get it there.' Senate Minority Leader Chuck Schumer (D-N.Y.) noted that the two sides are engaged in discussions. 'Look, we all know the level of corruption in the Trump administration is higher than any administration probably in American history,' he said at a presser Tuesday. 'But on stablecoins, Democrats and Republicans are talking to each other.' Meanwhile, opponents of the GENIUS Act pointed to the World Liberty Financial deal in urging lawmakers to vote against the stablecoin bill. The deal was announced the same day Thune moved to fast-track the legislation. 'A shady fund backed by a foreign government just announced it will make a $2 billion deal using Donald Trump's stablecoins,' Sen. Elizabeth Warren (D-Mass.) said in a statement. 'Meanwhile, the Senate is gearing up to pass the 'GENIUS' Act – stablecoin legislation that will make it easier for the President and his family to line their own pockets. This is corruption and no senator should support it,' she added. Concerns about Trump's crypto moves have also spilled over to the House side, prompting Democrats to walk out of a hearing on market structure legislation Tuesday. Rep. Maxine Waters (D-Calif.), ranking member on the House Financial Services Committee, objected to the joint hearing between the panel and the House Agriculture Committee. She sought to block the hearing from moving forward, taking advantage of the need for unanimous consent. Republicans and some Democrats ultimately proceeded with a more informal roundtable, while Waters and several other Democrats left to hold a separate hearing on Trump's crypto ties. 'I, in good faith, could not provide my consent because our Republican colleagues refuse to address the unprecedented conflicts of interest presented by President Donald Trump and his family,' Waters said. Carter, the crypto founder, noted that the problems plaguing stablecoin legislation could spell trouble for more complicated market structure legislation. 'Even something as apparently uncontroversial as the stablecoin bill, which has been bipartisan, if that's not moving forward, I think it would be an extreme longshot that we could expect anything on market structure,' he told The Hill. 'Virtually everyone I know in crypto wished that Trump had just executed on his crypto platform and then not done anything else,' he added. 'Right now, it's like they're hugging us to death.'
