Opinion by Abdul Rafay Gadit, co-founder at Zignaly and ZIGChain
Digital asset treasury companies (DATCOs) now confront a classification problem the market can’t ignore. Once simple balance sheets that held Bitcoin to signal long-term conviction, many treasuries are shifting toward strategies that look nothing like passive custody: rotating tokens, staking, and even running protocol infrastructure. That evolution raises new, concentrated risks and forces a choice about what these firms actually are.
The original DATCO playbook was straightforward: own major crypto assets, show conviction, and let macro trends determine outcomes. That model appealed to boards, auditors and index providers because it minimized execution risk and emphasized market exposure. But the model is breaking down as firms pursue yield and operational involvement beyond merely holding tokens.
Industry participants call this trend “active treasury management,” but the label understates the danger. Seeking higher returns by moving into volatile tokens, leveraging staking income, or operating validators creates exposure to correlated tail events and operational failure modes. In stressed markets, positions in less liquid tokens can unwind quickly and in lockstep, exactly when liquidity is scarcest. That amplifies downside in ways passive holding did not.
Even more consequential is the migration from asset holder to infrastructure participant. Running validator nodes, participating in governance votes, and managing protocol keys are activities centered on reliability, control and system participation — not passive investment. These responsibilities introduce distinct operational risks: slashing and unstaking penalties, uptime and redundancy requirements, key custody and rotation, concentrated client or counterparty exposure, and the legal and reputational impact of governance choices. These are business risks that boards must treat as core, not ancillary.
Once a DATCO accepts protocol responsibilities it is no longer exposed solely to market volatility; it is exposed to execution risk and protocol outcomes. That reality creates two clear, defensible identities: either operate as an infrastructure company with enterprise-grade controls, or act as a clearly regulated investment vehicle with fund-style governance. The danger lies in occupying the middle ground — capturing the upside of active operations without adopting the necessary governance, accountability and transparency.
To avoid being treated as unregulated investment vehicles — and to protect investors and counterparties — DATCOs adopting active strategies must implement fund-grade guardrails. That means explicit, public disclosures of strategy and risk; separation of custody, execution and oversight functions; independent internal controls and board oversight; audit-ready reporting and regular external audits; and stress-testing that models correlated drawdowns and protocol-level failures alongside price shocks.
Addressing these risks also requires better infrastructure. Legacy tooling—ad hoc wallets, spreadsheets and loosely governed smart contracts—was not built to combine token holdings, staking rewards and compliance obligations under a single mandate. Institutional on-chain rails are needed: delegated execution, policy-driven controls, multi-party key management, and auditable workflows so treasuries can scale operations without amplifying systemic risk. In an active treasury model, operational and market risks are intertwined and must be managed with equal rigor.
The MSCI consultation about how to classify DATCOs is a sign the easy era is over. As treasuries evolve from passive holders into active operators, regulators, index providers and investors will demand clarity on what these companies are and what risks they take. Those who chase yield without upgrading governance and infrastructure risk embedding hard-to-reverse exposures — and by the time market classification catches up, the losses and reputational damage may already be done.