Author: Zen, PANews
In 2025, amidst the wave of "Crypto Treasury Companies" (DATs), leading market maker GSR Markets was a very active participant. In a series of financing rounds for Digital Asset Treasury Companies (DATs) corresponding to mainchain assets such as Solana, Litecoin, and Ethereum, GSR participated as a lead investor or core contributor, assisting in attracting institutional funds into this asset class.
In late September, GSR’s asset management business filed registration documents with the U.S. Securities and Exchange Commission to launch the “GSR Digital Asset Treasury Companies ETF.” This ETF aims to allocate at least 80% of its assets to publicly traded companies that directly hold substantial amounts of digital assets in their corporate treasuries.
Earlier this month, GSR announced that it had signed an agreement to acquire Equilibrium Capital Services, LLC, a Portland-based broker-dealer registered with the U.S. Securities and Exchange Commission and regulated by the Financial Industry Regulatory Authority (FINRA).
After the acquisition, GSR will not only be able to provide secondary market depth for projects, but also act as a licensed brokerage firm in the United States to facilitate PIPEs, assist listed companies in completing share issuances and raising capital, and essentially play the role of an "encrypted investment bank".
PANews recently conducted an exclusive interview with GSR CEO Xin Song, focusing on his extensive strategy and in-depth thinking regarding Delta neutrality. Xin also mentioned that GSR has always adhered to a delta-neutral strategy, and therefore did not suffer losses during the "October 11th" black swan event. The following is part of the interview.
The digital treasury's three-pronged approach: official endorsement, Wall Street support, and transparency.
PANews: As a leading market maker, GSR has been very active in the DAT market. Could you share your experience with this?
Xin: I'll start by talking about GSR's overall positioning, and then go on to explain why we're making moves in the DAT sector.
GSR positions itself as a "one-stop financial services platform in the digital currency field." We don't just appear at a single stage, but rather we continuously participate and provide services throughout the entire lifecycle of a crypto project, from its earliest stages to maturity.
Initially in the primary market stage, we participate as early-stage institutional investors, or even angel investors, in the angel and Series A rounds of projects. At this stage, we not only provide funding but also act as advisors throughout the entire lifecycle, assisting projects in planning their path in the post-investment phase: how to transition to the secondary market, how to handle token listing negotiations, and how to communicate terms, liquidity arrangements, and unlocking arrangements with various exchanges, etc.
Once a project enters the secondary market, we will provide liquidity services, including both on-exchange and off-exchange trading.
When a project matures, its treasury reaches hundreds of millions of dollars, and its token's market capitalization ranks among the top 10 or 20 in the entire network, its needs will become two core issues: First, how to manage, preserve, and increase the value of its assets? Second, how to "break out" into the traditional capital market and gain genuine recognition from traditional institutional investors, rather than just treating it as a "token"?
Our involvement with DATs essentially helps them expand their reach to target investors, allowing more traditional investors to legally and compliantly access these crypto asset exposures. This year, we led investments in Solana, Litecoin's DAT company Upexi, and Lite Strategy, and also participated in funding rounds for 12 other DATs, including SBET and Bitmine, which are part of the Ethereum ecosystem, as well as other smaller cryptocurrencies.
All of these factors combined made a very significant contribution to our company's overall revenue in the first half of the year. It can be said that this was a key area we focused on in the first half of this year.
PANews: What kind of DAT company do you think can win in the competition, and what qualities do they need to have?
Xin: The DAT companies we are currently focusing on and willing to invest in generally have two characteristics:
First, the management team must include genuine crypto natives, even senior members from the blockchain's foundation and core team, who can personally participate at the board and operational levels. This is essential to handle issues requiring a high level of crypto knowledge, such as staking, node selection, lock-up arrangements, and unlocking schedules.
Secondly, this team can also approach Wall Street and traditional institutions, clearly explaining their story to traditional investors. For example, BitMine's Tom Lee can use the language of traditional finance professionals, appearing on traditional media like CNBC to explain "what Ethereum actually does." His approach is very direct and blunt, but particularly effective with traditional investors.
Secondly, there's execution and transparency. In terms of transparency, I think Metaplanet does an excellent job. They directly display their positions, acquisition records, and profit sources in real-time on their front-end dashboard: for example, how much Bitcoin they bought today, how much more they earned through derivatives to enhance their returns, and their current paper return, etc.
This transparency is particularly appealing to young investors and newly entrant compliant retail investors. Investors can proactively review the financial situation of the companies they invest in, rather than passively waiting for quarterly financial reports in the traditional model. Conversely, poorly performing DAT companies typically have poor execution and information disclosure, are ambiguous about their business and revenue models, and are not open and transparent to the market, so the market naturally doesn't buy into it.
Asset selection focuses on hard metrics such as non-security tokens and liquidity.
PANews: By applying for ETFs and acquiring brokerage firms, are you transforming into asset issuers? How do you determine which crypto assets are worth making into DAT?
Xin: Strictly speaking, we are not the issuing entity ourselves. We are more like the ones who assist them, setting up the structure and bringing things to fruition. As an intermediary, we help them achieve their goals.
We have acquired a brokerage firm shell in the US and will use it as a basis to apply for a placement agent license. Once we obtain the license, we can legally help these listed companies complete PIPEs: setting terms, finding institutional funding, selling shares, and bringing in capital. We are not the "issuer" ourselves, but we are the ones who truly make this issuance happen.
Returning to the question of "how to choose the underlying assets," a year ago, the US regulatory stance was that "most tokens could potentially be considered security." If you directly incorporate these assets into a US-listed company and then sell that company's stock, the SEC could easily classify your entire investment as a "collective investment vehicle packaged with securities," directly bringing it under the regulatory framework of the Act of 1940. This meant you could almost only wait for a finished ETF, which would be a very slow process.
In that environment, we couldn't wait that long, so the first wave could only select assets that were more like "commodities" than "securities" in terms of regulation to make DATs. Solana was in that position at the time: it was viewed more like a commodity, and the market expected futures/options contracts to appear on traditional derivatives exchanges like the CME, which were regulated more like commodities than securities.
Meanwhile, Bitcoin and Ethereum already had or were about to have ETF solutions, meaning US institutional investors could directly buy BTC/ETH ETFs and didn't need to buy a "BTC/ETH version of DAT." However, Solana didn't have an ETF, and the compliant channels were essentially nonexistent. Therefore, the "Solana-type DAT" had a very strong selling point at the time: for US stock market funds, it was almost the only compliant way to obtain Solana exposure.
Today's environment is significantly more relaxed. Mainstream crypto assets are no longer all considered securities, and regulators have given more leeway in their selection criteria. However, we still use hard indicators such as brand recognition and liquidity in our screening. A typical DAT strategy is: a company raises $100 million through a PIPE, then gradually buys the underlying assets in the open market, turning them into the company's main reserves. If the coin's secondary market liquidity is insufficient, you can artificially inflate the price while building your position, but this kind of operation is essentially self-destructive in terms of credibility.
Furthermore, there's a current trend of "multi-asset DAT" strategies, where one asset holds 1/3 Bitcoin, 1/3 Ethereum, and 1/3 Solana. Frankly, we have reservations about this model. Most institutional investors can easily buy BTC DAT, ETH DAT, and Solana DAT separately and allocate them to their own assets in 1/3, 1/3, 1/3 proportions. Why would they need to hire a company to handle their asset allocation? What is its unique value? In contrast, we prefer to "focus on a single asset and thoroughly explain the narrative and treasury management logic of that blockchain."
The Cooling Down and Paradigm Shift of DAT: From Coin Hoarding to Business Integration
PANews: Some people believe that the DAT narrative has begun to cool down and recede. What do you think?
Xing: In the first half of the year, the DAT market actually experienced a very strong, even explosive, growth. If you go back to the second half of last year, there were only "Bitcoin-related DATs" running at that time. A typical example is MicroStrategy—which can be understood as a listed company that staked almost its entire balance sheet on Bitcoin, openly turning itself into a "securitized vehicle for Bitcoin exposure."
At that time, the total market capitalization of these companies was only around $40 billion, and their underlying assets were primarily Bitcoin. However, things started to change in the first half of this year. A key pioneering case we spearheaded was packaging "non-Bitcoin" crypto assets like Solana into publicly traded exposures using a traditional investment and financing structure like the US stock market PIPE. This marked a turning point "from Bitcoin to multiple assets."
Looking back now, the total market capitalization of the entire sector has ballooned from $40 billion to over $130 billion, more than tripling. The number of participating companies has also expanded from a handful to over 200 globally. The underlying assets are no longer limited to Bitcoin but have begun to cover mainstream public blockchain ecosystems such as Ethereum and Solana.
Why the sudden surge? The core reason lies in the relatively relaxed regulatory environment. Many traditional funds, primarily from the US, believe that the regulatory uncertainty surrounding crypto assets is decreasing. This means that digital currencies have officially entered their field of vision and are beginning to be considered by large funds as "assets worthy of serious study." These traditional investors and institutions are unlikely to open accounts, buy coins, or manage private keys themselves, as the migration costs are too high and compliance concerns are too great.
What DAT does is provide them with a "new entry point within the old system": you still buy shares of a listed company through your familiar securities account, but this company is essentially the "carrier" of a certain public blockchain asset. From its balance sheet, you are actually indirectly buying exposure to Solana, Ethereum, and Bitcoin. For institutions that cannot or are unwilling to directly touch token spot trading, this becomes a way to "finally participate legally."
Previously, so-called "crypto exposure stocks" were basically only involved with "indirectly related parties" such as mining companies, exchanges, and infrastructure providers. The emergence of DAT, however, has for the first time transformed the act of "directly holding exposure to mainstream public chain assets" into a securitized vehicle.
Currently, the popularity of DAT is indeed cooling down, but this does not mean it is "over," but rather that it is "entering the screening stage."
This process is essentially very similar to the evolution of public blockchains themselves. It's not that hundreds of public blockchains will become leaders; eventually, most of the transaction volume will concentrate on two or three chains. DAT will also follow this logic.
In the future, for the same mainstream public chain, only two or three DATs that are truly recognized by the market will likely become the "legitimate entry point." In particular, those DATs with official support, foundation endorsement, or even core members of the original team taking charge of management will be the survivors.
Those DAT companies that are merely "shell companies with cash reserves" will gradually be marginalized. Therefore, I would say that the past six months were a period of rapid, unregulated growth, and now we are entering a period of structural elimination. This process is inherently healthy.
PANews: Some DAT companies have no business whatsoever with cryptocurrencies. What's your opinion on this?
Xin: I call this "version 1.0" of DAT. This approach is indeed quite crude: the company's main business and strategic direction are completely separate from its logic of using these crypto assets as a treasury.
You'll see many small-cap traditional companies with poor core business performance and on the verge of transformation suddenly putting cryptocurrencies on their balance sheets. This story might work in the first round, but it will definitely be eliminated in the next round. The reason is simple: it has asset management value, but it lacks sustainable operating capabilities; it hasn't tied its "token assets" to its "core business capabilities."
We believe that a healthier form of DAT's "2.0 version" is one where the core business and the holding of crypto assets are intrinsically related, rather than forcibly intertwined.
One direction we've observed is Bitcoin mining companies + DAT (Digital Bitcoin). Mining companies naturally hold large inventories of native Bitcoin. Mining, in essence, involves holding Bitcoin in one's own account for a long period at a relatively discounted operating cost, which is itself a long-term bullish strategy. The business model of mining companies is actually very similar to that of "commodity producers": relatively stable output, but the price of the commodity produced (BTC) is extremely volatile.
What mining companies need to do is hedge against volatility risk and improve the yield of their BTC holdings. Miners have already been using various derivatives, selling options, and hedging tools in the past. Therefore, packaging the mining business and professional BTC asset management of mining companies as an integrated narrative and presenting it to the market may be a good direction and breakthrough in the next cycle. In fact, several US-listed mining companies have already begun to move in this direction.
DAT's implementation in Asia: Japan and South Korea are viable options, but challenges remain.
PANews: Besides the United States, which other markets are suitable for promoting the implementation of DAT?
Xin: I think we need to look at the "scale of the capital market itself" and the "realistic limitations at the implementation level." In our judgment, the only Asian countries worth studying are Japan and South Korea.
South Korea's advantage lies in its extremely high level of retail investor participation, essentially reaching the level of "national speculation," with very high cryptocurrency penetration and market enthusiasm. Although the overall market capitalization of the South Korean domestic stock market is not among the top in the world, its trading volume and activity are very high.
Japan's market demonstrates its value in a different way. Japan is a top-five global capital market with a very high level of capital size and institutional maturity, and it also has a crucial structural advantage: its tax structure.
In Japan, individual investors who make money through stocks pay capital gains tax, which is around 20%. However, if they directly trade cryptocurrencies, the profits are taxed as personal income, with a maximum marginal tax rate exceeding 50%. This means that for the same profit of 100 yen, direct cryptocurrency trading might incur over 50 yen in tax. This explains why "Bitcoin-like DATs" like Metaplanet are particularly popular in Japan.
Of course, both markets also have their own practical challenges.
The problem in South Korea is the excessively long processing time. The US-style private placement model, requiring a complete "new stock issuance + introduction of crypto asset exposure" process in South Korea, could take up to a year for compliance registration. In contrast, similar operations in the US can be completed in 15-30 days.
In Japan, the restrictions are based on quotas. For example, if your company is valued at $100 million, Japan might only allow you to issue about 30% new shares. The upper limit for a single round of financing is strictly controlled by policy; it's not a free market where you can issue as many shares as you want. Furthermore, as far as I know, Japan is indeed discussing tax reform, and adjustments may be made in the future, but they haven't been fully implemented yet. So, at this stage, this is actually a window of opportunity.
In conclusion, Japan and South Korea are the markets outside the US that deserve serious attention, not just empty slogans. However, Japan and South Korea are not simply "copying the US model." The difference lies in the very realities of implementation.
Market maker GSR: No betting on direction, no crossing the line.
PANews: Returning to your traditional strength—market making—there's a stereotype, even a demonization, of market makers, with people saying that market making is about manipulating prices, inflating trading volume, and creating market trends. How do you respond to this?
Xin: Such companies do exist, especially in places with weaker regulations. But we don't do that.
GSR positions itself as a "compliant liquidity infrastructure," not a market maker betting on the direction of a transaction. Our founding team comes from traditional finance, Wall Street, and investment banking systems, which carries a high opportunity cost, and they are very aware of the importance of compliance. Our founder, Cris Gil, worked at Goldman Sachs for over a decade, and from day one, he set the tone for the company as: we want to be a legitimate company and not cross any red lines.
We only promise our clients three things, which can also be described as three KPIs:
Spread control: We reduce the gap between the buying and selling prices, allowing users to complete transactions with the lowest possible transaction costs.
Depth: We thicken the order book, placing enough buy and sell orders to ensure that when institutions want to enter or exit large positions, they won't suddenly drive the price down or up. This directly determines the trading experience.
Uptime: We need to be online 24/7 to maintain bilateral quotes, API, and pending orders. In other words, someone needs to be present regardless of market conditions.
In addition, we do not promise to "boost trading volume for clients," we do not create fake trades, and we do not actively drive up prices. We only act as "makers," not as "takers" who actively take orders and push up prices. When there are large price differences between different exchanges, we will engage in arbitrage to level the gap. This is for the sake of end-user experience, not for "market manipulation."
Therefore, we have also adopted a heavily regulated approach. We were one of the first market makers to obtain a license in Singapore, a license that took us four years to obtain. This means that we can withstand scrutiny from top-tier regulatory agencies in areas such as anti-money laundering (AML/KYC), internal risk control, prevention of self-trading, prevention of wash trading, and system control. This is the bottom line that distinguishes us from "gray teams."
It is precisely because of this principle that we do not experience the situation of "being wiped out entirely by betting wrong on the direction" during market crashes. For example, during the big drop on October 11th this year, we suffered almost no losses and even made a profit because we use a delta-neutral strategy and do not gamble on the direction of the market.
Long-term holding of Bitcoin and Ethereum
PANews: One last question, could you give some advice to our readers, that is, ordinary investors?
Xin: We do not act as market makers and do not provide financial advice; this is a bottom line that our company's employees have always adhered to. But if I were to say what I personally do: I entered this industry in late 2017/early 2018, so it's been almost eight years now. I bought Bitcoin and Ethereum very early on, and then basically stopped trading them.
The reason is very simple: market volatility will always exist, and emotional fluctuations will repeatedly occur. If you try to gamble on every wave with subjective judgment, it's easy to end up on the wrong side at some point. However, from a long-term survival perspective, the probability of Bitcoin and Ethereum going "completely to zero" is extremely low.
Bitcoin's position is now very clear; it's practically the "anchor" of the entire digital asset world. As for Ethereum, I remain bullish in the long term, even when it was being criticized and its price plummeted to around $1,000. My reasoning is its developer density, developer quality, and ecosystem continuity. Ethereum remains the most stable in attracting top engineers, continuous iteration, and removing institutional barriers.
Therefore, if I had to give a personal piece of advice, it would be: hold Bitcoin and Ethereum long-term and avoid frequent, subjective trading. For other cryptocurrencies, observe them first and avoid impulsive, frequent transactions.
