Xiao Feng's Bitcoin Asia 2025 Speech: ETFs Are Good, DATs Are Better

Speaker: Xiao Feng, Chairman and CEO of HashKey Group. On August 28th, Dr. Xiao Feng, Chairman and CEO of HashKey Group, delivered a keynote speech titled "ETFs Are Good! DATs Are Better!" at Bitcoin Asia 2025. This speech is based on on-site shorthand, with some omissions that do not affect the original meaning. In recent months, many friends have asked me a question: With Bitcoin trading evolving from on-chain to off-chain stock exchanges, becoming a very popular investment tool within the stock market, is an ETF or a DAT (Digital Asset Treasury) a more suitable investment tool? My personal conclusion is that the DAT model, like the initial introduction of ETFs, is a revolutionary new financial instrument. We know that stocks evolved from individual stocks traded on stock exchanges to index funds, and then to exchange-traded funds (ETFs). These innovations in financial instruments have created a vast new asset class. Cryptocurrency has moved from on-chain to off-chain, using the stock market, a method currently accessible to 99% of the population, allowing all stock market investors to easily and habitually access crypto assets. So which approach is better? ETFs or DATs? My personal opinion is that DATs may be the best way for crypto assets to move from on-chain to off-chain. As we can see, the only single commodity, single asset investment tool in the global capital market is gold, the largest ETF. There are no single-stock ETFs for stocks, because stocks are already traded on stock exchanges and can be easily purchased. If you want to buy a basket of stocks, such as an index fund, you need other investment tools. Index funds or ETFs are the most convenient tools for traditional investors. Previously, single-asset ETFs only covered gold. With the launch of the BTC ETF, we now have a second type of single-asset ETF. This is a natural and natural progression, as ETFs are commonly used to create investment vehicles, making it easier for traditional stock market investors to invest in alternative assets, such as crypto. However, when valuing ETFs, we use net asset value (NAV); while DATs use market value (MMV). These two concepts are completely different. MMV leads to greater price volatility, while NAV volatility is much smaller than MMV. Therefore, as a single investment tool for crypto, I believe that DATs are the preferred approach. Better Liquidity: DATs' biggest advantage is better liquidity than ETFs, a crucial consideration for any investor. My observation is that the smoothest and most effective way to convert crypto assets into traditional financial assets is through exchanges. ETFs, on the other hand, grow in size through subscriptions and redemptions, which require three or more intermediaries and take one to two days to complete. This is clearly inferior to transactions on a distributed ledger, which may only take two or ten minutes. Therefore, transactions may become the primary method for converting between traditional financial and crypto assets in the future. Therefore, better liquidity is DATs' core advantage over ETFs. Furthermore, market capitalization offers more suitable price elasticity than net asset value. We know that a key reason MicroStrategy is able to continuously build its financing structure through various financing instruments and hold a large amount of Bitcoin is the inherent volatility of BTC. Furthermore, hedge funds and other alternative investors are attracted to the platform because they can own a more volatile asset through shares. They can then split the equity and bonds over-the-counter, turning volatility into another tool, both protecting their own prices and allowing for arbitrage. Convertible bonds (CBs) are particularly attractive, as they are often structured and broken down over-the-counter by hedge funds and alternative investment firms. Therefore, these institutions prefer investing in companies like MicroStrategy, buying its shares or convertible bonds, because they can structure their investments. This allows for greater price elasticity, something ETFs lack. Thirdly, it offers a more appropriate leverage ratio. Previously, single-asset investing had only two extremes: holding spot BTC or ETH, or buying futures or CME contracts. There's a significant gap here. This gap allows listed companies to design appropriate leveraged financing structures, allowing you to simply hold shares while the company manages the leveraged structure, thereby allowing you to enjoy a premium higher than the price growth of the cryptocurrency itself. Instruments like DATs offer both a premium and built-in downside protection. Imagine if the stock price drops below the net asset value, it's like giving investors an opportunity to buy BTC or ETH at a discount. This market price situation will be quickly eliminated by the market, making it a good downside protection. Otherwise, you'd rather buy shares, which is equivalent to buying BTC or ETH at a discount. Taking all these factors into consideration, DATs may be a more suitable financing tool for crypto assets. Just as ETFs were well-suited for index or basket investment strategies in the stock market, DATs may be a new trend we'll see over the next three to five years. The scale of assets held by DATs may approach that of current stock market ETFs, perhaps within another decade. Therefore, I believe DATs are the most promising new investment tool in 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.