Authored by Charles Dennis
Last week, the stablecoin USD1, issued by World Liberty Financial, briefly lost its dollar peg after hackers compromised the social media accounts of its founders and spread misinformation. The panic triggered a short-lived price drop, rattling confidence in what is marketed as a 鈥渟table鈥� digital asset.
Although USD1 quickly recovered and no underlying code was breached, the incident reignited concerns about the vulnerability of cryptocurrencies – even those designed to minimise volatility.
The episode comes at a time when a growing number of start-ups are reconsidering how they manage their treasury reserves. Traditionally reliant on cash, some are now turning to digital assets as an alternative store of value. More than 200 companies hold Bitcoin on their balance sheets, and private and public firms collectively store an estimated $115 billion in cryptocurrency, according to DLA Piper. The trend is also expanding beyond Bitcoin into stablecoins and other tokens.
This shift has given rise to the so-called Digital Asset Treasury (DAT) strategy, which promises potential upside through asset appreciation. But the turbulence surrounding USD1 highlights the central dilemma: while digital assets may offer growth opportunities, they also expose start-ups to volatility, cybersecurity risks, and reputational shocks.
For early-stage companies particularly vulnerable to sudden losses, the question is not just whether crypto can generate returns but whether it belongs on a start-up鈥檚 balance sheet at all.
How Crypto Can Be an Opportunity for Start-Ups
Holding cryptocurrency in the treasury can offer start-ups several advantages. Beyond potential appreciation in value, digital assets can signal innovation to investors, which helps position companies as forward-looking in a competitive market.
Additionally, Crypto provides access to lower-cost cross-border payments and crypto-native customers, which traditional banking systems may not serve efficiently. This might just be an edge for startups trying to define their brand in a saturated market.
In 2020, MicroStrategy made headlines by converting a large portion of its cash reserves into Bitcoin. The decision was a long-term strategy to protect the company against fiat inflation and capture potential upside in digital assets.
While the value of Bitcoin fluctuated sharply, MicroStrategy鈥檚 treasury move attracted attention from investors, positioning the company as a pioneer in digital asset strategy. However, because MicroStrategy holds a significant amount of cryptocurrency in its treasury, its stock now moves closely with the volatile crypto market.
But for start-ups, even partial allocation to crypto can signal an innovative approach without jeopardising balance-sheets.
The Risks of Crypto for Start-Ups
Despite the potential benefits, crypto carries significant risks that can impact startup survival. Market volatility can quickly erode a start-up鈥檚 runway, and sudden drops in value may force the company to sell assets at a loss.
Cybersecurity threats, from wallet hacks to phishing attacks, remain a constant concern, and accounting and regulatory requirements for crypto can be complex and vary across countries.
In early 2026, amid a broad downturn in digital asset prices, American Bitcoin Corporation reported a $59鈥痬illion quarterly loss driven largely by declines in the value of the Bitcoin it held in its treasury.
The company chose to retain every Bitcoin it mined rather than sell into the market, so a steep drop in Bitcoin鈥檚 price translated directly into losses. As of February 2026, the company鈥檚 stock has plummeted 90% since September last year.
This episode underscores how holding large crypto reserves can create severe vulnerabilities for companies without diversified sources of cash flow. As a high-risk new alternative, a Digital Asset Treasury (DAT) strategy should make up only a small portion of a start-up鈥檚 reserves.
Industry experts offer further guidance on how companies can approach this emerging option responsibly.
Our Experts:
- Didier Lavall茅e: Founder and CEO at Tetra Digital Group
- Anthony Georgiades: Founder and General Partner at Innovating Capital
- Artur Szablowski: Editor-in-Chief at Finonity
- Andrew Bahlmann: Founder at Deal Leaders International
Didier Lavall茅e, Founder and CEO at Tetra Digital Group
鈥淭he brief depeg of USD1 to around $0.994 last week鈥攁ttributed by WLFI to a failed coordinated FUD and short-selling attack鈥攚as swiftly resolved, with the stablecoin recovering to parity within minutes. This quick rebound underscores the robustness of its 1:1 fiat backing and effective direct redemption mechanism, which prevented any deeper or prolonged deviation.
“Far from exposing fatal weakness, the episode actually demonstrated resilience: no smart contracts or reserves were compromised, and the peg held firm under deliberate pressure. WLFI’s prompt rollout of a real-time, on-chain reserve tracker further strengthens transparency and user confidence.
“For corporate treasury teams, fiat-backed stablecoins like USD1 offer compelling advantages鈥攏ear-instant global transfers, 24/7 availability, programmable features, and often attractive yields鈥攐utpacing traditional cash management in efficiency and cost. The incident highlights that while temporary market noise can occur, strong collateralisation, redeemability, and issuer responsiveness make these assets increasingly suitable as a modern, diversified treasury component.鈥�
Anthony Georgiades, Founder and General Partner at Innovating Capital
鈥淚ncidents like World Liberty don鈥檛 mean 鈥渃rypto in treasury鈥� is broken. They highlight poor design and weak governance. This looks less like collapse and more like a regime change: capital is moving away from narrative鈥慸riven tokens toward infrastructure – stablecoin rails, tokenised Treasuries, and settlement layers that resemble financial plumbing rather than speculation.
“For startups, that distinction matters. The core runway should still sit in cash and short鈥慸uration Treasuries. Crypto belongs in two buckets: as a working鈥慶apital rail via fully backed, regulated stablecoins or tokenised Treasuries, or as a clearly defined strategic sleeve in assets like BTC or ETH, with explicit board approval and strict controls.
“When used this way, crypto is not an all鈥憃r鈥憂othing bet on the balance sheet. It becomes a targeted tool for faster settlement and better capital efficiency, layered on top of a conservative base that keeps the company alive through shocks.鈥�
Artur Szablowski, Editor-in-Chief at Finonity
听
鈥淭he World Liberty Financial incident illustrated both sides of this debate simultaneously. USD1 fell to $0.98 on Binance, with $270 million in outflows within hours – yet it re-pegged in under 30 minutes because the redemption mechanism functioned as designed. For context, when SVB collapsed in 2023, founders holding cash in a federally regulated bank couldn’t touch their money for three to five days.
“The problem is that people keep conflating Bitcoin with stablecoins when discussing “crypto treasury.” Bitcoin can drop 70% in a bear market – that’s not a treasury asset, that’s a speculative position. Treasury-backed stablecoins are a fundamentally different instrument, but they still introduce smart contract and counterparty risks you simply don’t have with a T-bill ladder.
“My view: if you’re an early-stage startup burning through runway, keep operating cash in conventional instruments. If you’re crypto-native and already transacting on-chain, the infrastructure is mature enough 鈥� but cap the allocation.鈥�
Andrew Bahlmann, Founder at Deal Leaders International
鈥淐rypto can be an effective treasury asset from a capital discipline perspective but it is not a technological decision. When I advise founders on exits and liquidity at Deal Leaders International, every time we come back to the same question of whether the capital will protect the company in a downturn. Even stablecoins are subject to counterparty and governance risks which were highlighted by recent stable coin attacks.
“Early-stage companies view their treasury capital as runway. They use this capital to fund payroll, product development and just making it through slow revenue cycles. Any volatile or structurally uncertain crypto assets can eat into that safety net. While there could be a very limited strategic allocation of crypto for companies with surplus liquidity and solid controls, it should never be used to displace a company’s core cash reserve.
“Founders should remember that treasury capital is about building resilience and return second; especially when confidence in markets can collapse overnight.鈥�
