Over on Cooley’s CapitalXchange blog, Liz recently gave a rundown of the “main flavors of strategies for accessing public markets and launching digital asset treasury companies (DATCos).” In addition to IPOs, business combinations with SPACs, double dummy acquisitions and reverse mergers, she also discusses secondary acquisitions of majority interests and the phased acquisition or treasury-only strategy.

In the latter, the crypto company purchases a noncontrolling interest in a public company in a secondary transaction or by negotiating a PIPE. These have generally been priced at market in order to avoid triggering stock exchange approval requirements for greater than 20% issuances. However, Nasdaq has recently been taking a close look at these deals and engaging with listed companies on how the exchange’s shareholder approval rules might apply, raising concerns about the change of control implications, depending on the number of board seats negotiated, and when a deal is structured as an in-kind contribution.

Nasdaq isn’t the only SRO that has been more closely scrutinizing crypto treasury deals. As reported by the WSJ, FINRA has reached out to as many as 200 companies regarding unusual trading volumes and stock price spikes in the days leading up to public announcements that they would adopt a crypto treasury strategy.

Process aside, if you’re a public company considering becoming a dedicated public cryptocurrency treasury company or otherwise holding crypto on your balance sheet — especially if you’re an operating company that isn’t otherwise involved in the crypto sector — you need to be thinking through the attendant risks and complexities. Check out this Skadden alert on what public company boards need to know if they’re thinking of adding bitcoin to the balance sheet.

– Meredith Ervine