DeFi Technologies pivots to institutional funds and in-house custody to weather the crypto winter
Despite AUM falling to $427M and monetization compressing, the company is betting on UCITS, hedge funds, and custody as higher-margin, uncorrelated growth engines.
DEFTF · Earnings Call · 2026-05-15
A defensive quarter, a strategic shift
The first quarter of 2026 was brutal for digital assets, and DeFi Technologies felt it: average AUM slid to $503M, touching $427M at the lows, and monetization compressed to just 3.5% of AUM. Yet the company still turned in “revenue of $11.2 million and positive net income of $4.9 million” — Johan Wattenstrom, Chief Executive Officer · 2026-05-15 — a testament to cost discipline and a diversified platform. The management fee yield fell to ~1% from 1.2% as Bitcoin's weight in AUM rose, and Paul Bozoki admitted “the effective staking yield declined to 2.5% due to the significant price declines in the altcoins” — Paul Sandor Bozoki, Chief Financial Officer · 2026-05-15. But the quarter also crystallized a deliberate pivot: instead of merely expanding the ETP shelf, DeFi Technologies is building institutional-grade fund structures and a proprietary custody stack to capture a different class of capital.Building the institutional on-ramp
The centerpiece is a family of UCITS and hedge funds targeting pension funds, family offices, and fund-of-funds. Andrew Forson highlighted the appeal: “The beautiful thing about the UCITS ICAV structures we have been working on are their appeal to and accessibility by large institutional capital allocators worldwide” — Andrew Forson, President · 2026-05-15. Johan Wattenstrom quantified the fee economics — a departure from the flat ETP fees on Bitcoin products — noting “those will have at least the first fund and I think the second, and third 1 as well will have the 1.5% management fee plus 15% performance fee structure” — Johan Wattenstrom, Chief Executive Officer · 2026-05-15. That performance fee, he argued, is a “third uncorrelated leg of revenue streams” — Johan Wattenstrom, Chief Executive Officer · 2026-05-15 with a high Sharpe ratio. The pivot dovetails with broader market themes: tokenized stocks and stablecoin adoption are gaining traction globally, and DeFi Technologies is positioning itself as the issuer that bridges traditional capital markets with on-chain assets. Complementing the fund push is an in-house custody product. Johan explained: “We have an in-house custody technology stack, which we are developing now to productify and release to the public as a service” — Johan Wattenstrom, Chief Executive Officer · 2026-05-15 — a move that not only reduces reliance on third-party custodians but also creates a potential revenue line as real-world assets and stablecoins proliferate. The company's venture stakes in stablecoin projects (cNGN and Stablecorp) and the expansion of Stillman Digital's prime brokerage add further optionality.Risks and overhangs
The Nasdaq listing remains a live concern. Management pushed back on delisting fears, with Johan emphasizing “there is no risk of us getting delisted... we have plenty of runway” — Johan Wattenstrom, Chief Executive Officer · 2026-05-15 and Paul noting the eligibility for a second 180-day extension. The overhang of a potential reverse split is real, but the company frames it as a technicality. Meanwhile, guidance remains conservative: Paul pegged the breakeven AUM at $425M with a 5.8% monetization plus Stillman's contribution, and the company declined to give a consolidated revenue number until the fund products gain traction. The market's misperception that DeFi Technologies is simply a Bitcoin treasury company was explicitly rejected: the operating businesses (Valor, Stillman, and the emerging fund platform) are what will compound earnings.The strategy is a clear departure from the prior quarters' focus on retail ETP distribution. As recently as April, Johan described demand as “a lot of demand for the UCITS for the CCAF and for the normal hedge funds” — Johan Wattenstrom, Chief Executive Officer · 2026-04-07, and by November 2025 he had already signaled a shift toward “new vehicles and new more value-added products such as leveraged products, such as bonds, such as funds -- hedge funds, active managed certificates, UCITS funds” — Johan Wattenstrom, Incoming Chief Executive Officer · 2025-11-14. The Q1 call crystallizes that evolution with concrete fee structures and a timeline for revenue contribution in the second half of 2026.Besides our Valor core business and Stillman, this will be a third, I would say, very much uncorrelated leg of revenue streams... the 15% performance fee could be something that is totally uncorrelated to market levels.