How Treasury Firms Are Solving Ethereum’s Narrative Problem

For years, Ethereum has been a big player in crypto. But it has always struggled to win over Wall Street. Now, a new group of treasury companies may have cracked the code to make ETH more palatable to traditional investors.

Turning ETH into an “earnings machine”

Bitwise Chief Investment Officer Matt Hougan believes Ethereum’s biggest issue wasn’t technical, it was narrative.

If you think about the challenge that ETH has had from a valuation perspective over the last couple of years, it’s that Wall Street didn’t have a clean answer to why it had value.

Unlike Bitcoin, which markets itself as digital gold, ETH’s value proposition has been harder to pin down. Is it a store of value? A yield-generating token? A deflationary asset because of its burn mechanism?

That uncertainty made it hard for institutional investors to assign ETH a traditional role in portfolios. But according to Hougan, treasury companies are changing that, by putting ETH into equity-wrapped structures.

If you take $1 billion of ETH and you put it into a company and you stake it, all of a sudden, you’re generating earnings. And investors are really used to companies that generate earnings.

ETH treasuries not without risk

These treasury companies work like mini-holding firms. They raise capital through traditional tools, like equity sales or bonds, then use that capital to buy and stake ETH. That means investors now get exposure to Ethereum, but in a form they recognize: an equity investment.

Still, Hougan warns that ETH holding companies must tread carefully. Companies raising debt to buy crypto need to manage interest expenses and avoid overleveraging, especially in volatile markets. If ETH crashes and the company can’t cover its costs, it risks being forced to sell assets at the worst possible time.

Another issue is basis risk, when a company’s liabilities are in one currency (like USD), but its assets (ETH) fluctuate wildly in value. That said, Hougan downplays fears of a “catastrophic unwind.”

I think people’s image of a catastrophic unwind is wrong, even in a bad scenario. A slow, partial unwind is what would actually happen.

The bottom line

Ethereum may have started as a decentralized playground for developers, but its future might lie in something much more boring: predictable cash flow, professional capital structures, and investor-grade packaging. It might not be the most exciting narrative. But for Wall Street, that’s exactly the point.