Franklin Templeton warns of risks in corporate crypto treasury

• Publicly traded companies invest in cryptocurrencies as treasury
• Franklin Templeton Sees Risk of Dangerous Feedback Loop
• Crypto asset volatility impacts financial strategy

Franklin Templeton Digital Assets has published an analysis on the risks involved in corporate treasury strategies that use cryptocurrencies. According to the analysts, although the model has generated significant advantages for listed companies, there is the possibility of a negative feedback loop that could compromise the sustainability of these operations.

The Strategy Treasury Playbook pic.twitter.com/YXXdZmtlIm

—Franklin Templeton Digital Assets (@FTDA_US) July 2, 2025

More and more publicly traded companies are adopting a model based on the accumulation of digital assets such as bitcoin, ethereum and solana. Data from Bitcoin Treasuries indicates that 135 companies follow this model, inspired by the strategy of the former MicroStrategy — now called just Strategy — led by Michael Saylor.

Since the beginning of 2024, these companies have raised billions through instruments such as convertible notes, preferred stocks, and private offerings of public shares. The central idea is to use these funds to acquire crypto assets and leverage the market value based on the appreciation of the digital assets held on the balance sheet.

Among the highlights of the sector are Strategy (BTC), Metaplanet (BTC), Twenty One (BTC), SharpLink (ETH), Upexi (SOL) and Sol Strategies (SOL). All bet on the thesis that direct exposure to cryptocurrencies can be an effective tool for growth and appreciation of shares in the traditional market.

Franklin Templeton analysts explain that the model offers advantages such as raising capital at a premium to net asset value, in addition to exploiting the volatility of cryptocurrencies as a factor that increases the value of hybrid financial instruments, such as convertible notes. “Interestingly, the volatility of crypto assets — often seen as a risk — is a key factor for this strategy,” they noted in the report.

However, the biggest warning is about the possibility of a negative cycle: if the value of crypto assets falls significantly, companies may face difficulties in issuing new securities, see their liquidity compromised and enter a downward spiral that impacts both cash and market value.

The uncertain outlook raises questions about the resilience of the crypto treasury model in the long term, especially in a volatile and rapidly changing market environment.