Strive Asset Management is set to merge with Asset Entities, a move that is poised to form the maiden publicly traded Bitcoin asset management company, as announced on Wednesday. This merger will position the combined company as the newest contender in the corporate “Bitcoin treasury” arena – a concept initially introduced by Michael Saylor’s Strategy.
Asset Entities contributes its digital marketing and content delivery services to the merger, while Strive Asset Management brings its status as a Strive Enterprises subsidiary and an impressive $2 billion in assets under management. The merged entity will continue to operate under the Strive name and remain listed on NASDAQ.
In a released statement, Strive detailed its plans to leverage all available mechanisms to accumulate a Bitcoin reserve, aiming for minimal dilution to common shareholders. The long-term investment strategy is designed to outperform Bitcoin, using the cryptocurrency itself as the benchmark for capital deployment.
Strive’s distinctive “reverse merger structure” reportedly offers multiple competitive edges over other Bitcoin treasury companies, especially in terms of capital raised via a “first-of-its-kind” equity offering of the combined company in exchange for BTC. Importantly, this will be a “tax-free” transaction for investors, thanks to Section 351 of the U.S. tax code, which facilitates the taxless exchange of “appreciated assets” for stock.
Strive’s CEO, Matt Cole, affirmed the benefits of this strategy at the Strategy World conference on Wednesday. He explained that this tax-free approach would likely attract significant interest from Bitcoin holders with substantial gains, who traditionally face hefty IRS taxes when they sell their coins.
Strive joins a growing list of companies utilizing a Bitcoin treasury management approach, providing investors with leveraged exposure to BTC via a publicly traded equity, eliminating the need for direct token ownership. The merger will also pave the way for immediate access to a shelf registration statement to raise capital, with plans to generate $1 billion through equity and debt offerings.
Cole concluded by emphasizing the potential for increased leverage beyond current levels seen in Bitcoin treasury companies, highlighting the importance of providing explicit downside protection.
Disclaimer: The Block is an independent media outlet offering news, research, and data. As of November 2023, Foresight Ventures is the majority investor of The Block. Foresight Ventures also invests in other crypto-related companies. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block maintains its independence to deliver objective, timely, and impactful information about the crypto industry. This article is for informational purposes only and does not constitute financial, legal, tax, or investment advice.
