DigitalX Confirms $95M Crypto Treasury, Denies Managed Investment Scheme Status

Background and Regulatory Context

DigitalX Limited (ASX – DCC) has provided a comprehensive response to an ASX query letter concerning its cryptocurrency treasury strategy. The ASX’s inquiry focused on the legality, regulatory compliance, and business implications of DigitalX’s holdings of Bitcoin and Solana, as well as the company’s broader digital asset activities. This follows increased scrutiny of crypto treasury strategies by listed companies, particularly regarding compliance with ASIC Information Sheet 225 (INFO 225) and the Corporations Act.

DigitalX clarified that its treasury strategy is lawful across jurisdictions where it operates, having engaged legal advisors and maintained a conservative approach to uncertain legal matters. The company emphasized that holding Bitcoin and other digital assets is legal in Australia and globally, and managing these assets is akin to holding traditional commodities like gold.

Not an Investment Product or Managed Investment Scheme

Crucially, DigitalX stated it does not consider itself an issuer of investment products that provide retail investors exposure to crypto-assets, nor does its treasury strategy meet the definition of a managed investment scheme under the Corporations Act. The company’s shares confer rights only to the company itself, not to the underlying crypto holdings, which remain corporate assets managed at the executive and board level.

This distinction is important as it exempts DigitalX from certain licensing and disclosure obligations that apply to managed investment schemes and financial products. The company also noted that its Bitcoin ETF (ASX – BTXX) is a separate entity, and shareholders in DigitalX do not have direct exposure to that fund.

Strategic Objectives and Growth Plans

DigitalX disclosed that as of 30 June 2025, it held digital assets valued at approximately $83 million, increasing to over $95 million by 31 August 2025. The company aims to grow its Bitcoin holdings to 2,100 by 2027. This expansion is intended to support multiple business activities including trading and monetisation of Bitcoin, Bitcoin-backed lending and financing, participation in the Bitcoin Lightning Network as a node staker, and strategic acquisitions within the digital asset ecosystem.

While these initiatives remain at an early stage, DigitalX highlighted the potential for these activities to generate free cash flow, improve financing terms, and position the company as a leader in Australia’s digital asset sector.

Governance, Risk Management, and Custody

The company underscored its robust governance framework, with board-approved policies guiding treasury activities, risk appetite, and transaction authority. DigitalX employs institutional-grade custodians such as BitGo, Coinbase, and Kraken, with assets held primarily in cold storage and protected by multi-signature authorizations and multi-factor authentication.

Risk assessments considered volatility, liquidity, security, regulatory clarity, and technological robustness, concluding that Bitcoin remains the most suitable digital asset for treasury purposes. The company maintains continuous market monitoring and employs partial hedging strategies to mitigate extreme volatility without liquidating core holdings.

Experienced Leadership and Compliance Assurance

DigitalX’s board and management bring extensive experience in cryptocurrency and traditional finance, including leadership roles at Binance Australia, Animoca Brands, and regulated fund management. The company’s auditor, BDO, has a deep understanding of digital asset financial reporting and has been engaged since fiscal year 2020.

DigitalX confirmed full compliance with ASX Listing Rules, including continuous disclosure obligations, and stated that its responses were authorised by the board in accordance with its disclosure policy.