New York Digital Investments (NYDIG) has urged companies holding Bitcoin on their balance sheets to abandon the use of the so‑called market‑adjusted net asset value, or mNAV, warning that the metric can be misleading to investors and distort perceptions of corporate crypto holdings.In a move that raises fresh questions about disclosure practices in the nascent corporate‑treasury market, NYDIG argued that mNAV’s adjustments can obscure real‑time price volatility and the underlying accounting treatment of bitcoin, undermining comparability and investor confidence.
The call amplifies an ongoing debate over how firms should report digital‑asset positions amid rapid price swings and evolving market conventions. If embraced by the broader market or scrutinized by regulators, NYDIG’s position could prompt issuers and advisers to adopt clearer, standardized reporting frameworks – a shift that would affect investor dialogue, risk assessment and the public narrative around corporate bitcoin programs.
NYDIG Urges Bitcoin Treasury firms to Abandon ‘mNAV’ Over Transparency Concerns
In a move that underscores growing demands for market integrity, NYDIG has publicly urged Bitcoin treasury managers to discontinue reliance on the mNAV metric, calling it potentially misleading to investors and counterparties.The critique arrives against the backdrop of increased institutional participation following the 2024 approval of multiple spot Bitcoin (BTC) exchange-traded products, when clear price revelation and custody reporting became paramount. Unlike a conventional Net Asset Value (NAV) – which reconciles visible holdings, realized P&L and clearly defined fees - mNAV formulations can differ materially from the prevailing spot price and from on-chain realities, creating informational asymmetries that have historically produced single-digit percentage premia or discounts in comparable crypto investment vehicles.Consequently, the firm argues that continued use of nonstandard valuation methods risks confusing investors, compressing liquidity, and inviting regulatory scrutiny at a time when market participants expect clearer, auditable metrics.
From a technical standpoint, the objections hinge on the opacity of valuation adjustments and custody practices embedded in some mNAV implementations. Bitcoin is settled on-chain as utxos whose provenance and movement can be publicly verified after confirmations (commonly 6 for practical finality), yet mNAV ofen layers internal assumptions - for example, illiquidity discounts, hypothetical lending income, or pro forma accounting for fees – that are not always published or auditable. To address these gaps,NYDIG recommends adoption of verifiable standards such as proof-of-reserves with cryptographic proofs (e.g., Merkle-tree attestations), self-reliant third-party attestations of custody, and clear disclosure of revaluation frequency and fee schedules. For market participants,practical steps include:
- prioritizing products with recent auditor reports or on-chain proofs;
- verifying custody split between cold and hot wallets and associated counterparty exposure;
- tracking NAV-to-spot spreads and redemption/creation mechanics to assess liquidity risk.
These measures help both newcomers and seasoned allocators convert opaque signals into actionable due diligence.
Looking forward, the shift away from mNAV could have concrete market implications: greater transparency tends to narrow market spreads, lower transaction frictions, and incentivize institutional capital inflows, while persistent opacity can amplify counterparty and model risk. Therefore, treasury managers and corporate treasuries should consider standardized disclosures – for example, publishing on-chain balance snapshots, fee-adjusted realized NAV, and the percentage of holdings subject to third-party custody – to reduce information asymmetry. Meanwhile, investors should balance opportunity and risk by using on-chain analytics to monitor flows, limiting single-counterparty concentration, and benchmarking product valuations against both spot and audited NAVs. In sum, moving toward verifiable, standardized valuation practices aligns with sound blockchain principles of transparency and will better serve the evolving crypto ecosystem as regulatory expectations and institutional adoption continue to mature.
Custodian Warns Metric Misleads Investors, Calls for Standardized Valuation Practices
NYDIG, a prominent bitcoin-focused custodian and financial services firm, has publicly cautioned that the widespread use of the so-called mNAV or “modified net asset value” by treasury companies can mislead investors when it diverges from transparent, market‑based valuation conventions. In practice, some mNAV formulations adjust reported holdings for proprietary assumptions such as illiquidity discounts, locked-up capital, or internal hedging positions; when those adjustments are not fully disclosed, reported values may materially differ from a mark‑to‑market valuation based on consolidated spot prices. Moreover, mNAV can omit ongoing costs that erode economic value – including custody and insurance charges, settlement risk, and potential tax liabilities – which together can amount to several percentage points of difference versus a spot‑based NAV. Consequently,investors comparing corporate treasuries,funds,or exchange‑traded products without a standardized baseline face an uneven information landscape that can distort risk assessments and relative performance analysis.
To restore comparability and protect market participants, market practitioners and regulators should prioritize clear, auditable valuation protocols.Specifically, investors and issuers should adopt practices that include:
- Using a spot price sourced from a regulated, consolidated exchange feed for primary valuation;
- Disclosing adjustments explicitly - e.g., custody and insurance costs, staking/derivatives exposure, and liquidity discounts - and quantifying their impact in basis points or percentage terms;
- Publishing third‑party proof‑of‑reserves and independent audits that reconcile on‑chain holdings with reported NAV; and
- Reporting a reconciled pair of metrics where possible: a raw spot‑based NAV and an adjusted mNAV with transparent line‑item explanations.
For newcomers, a practical approach is to prioritize vehicles that publish audited, mark‑to‑market NAVs and proof‑of‑reserves; for experienced allocators, incorporate hedging strategies using futures to manage basis risk and stress‑test assumptions about liquidity and counterparty exposures under different market scenarios.
Looking ahead, the call for standardized valuation practices arrives amid structural shifts – including growing institutional adoption, the proliferation of spot and futures Bitcoin products, and heightened regulatory scrutiny that emphasizes investor protection and disclosure. those dynamics increase the benefits of transparency (improved price discovery, reduced counterparty uncertainty, and tighter bid‑ask spreads), but they also underscore risks: regulatory changes, on‑chain security incidents, or sudden liquidity shocks can still produce sharp revaluations. therefore, investors should interpret reported metrics within a broader analytical framework that blends conventional finance controls (audits, collateral and reserve accounting) with crypto‑native signals such as on‑chain realized cap, MVRV ratios, and confirmed custody practices (e.g., multisignature cold storage vs. custodial hot wallets). By doing so,market participants can better evaluate opportunities while managing the operational and systemic risks unique to the digital asset ecosystem.
Industry Response and Potential Regulatory and Reporting Implications
Market participants responded quickly when NYDIG publicly urged corporate holders to abandon the use of a so‑called mNAV – a modified net asset value that, according to NYDIG, can obscure true exposure to Bitcoin price moves and liquidity constraints. This critique has catalyzed debate across asset managers, miners, custodians and corporate treasuries about transparency and comparability. Following the SEC’s January 2024 approvals of spot Bitcoin ETFs, scrutiny intensified because exchange‑traded products report a daily NAV that is directly tied to spot pricing and market liquidity, whereas corporate disclosures have sometimes blended book‑value treatment, historical cost, and ad‑hoc adjustments. As a result, exchanges, auditors and index providers are increasingly focused on standardizing the presentation of crypto holdings so investors can compare exposure across vehicles without being misled by bespoke metrics.
From an accounting and regulatory outlook the dispute highlights material reporting challenges. Under prevailing practice manny U.S. public companies treat crypto assets like Bitcoin as intangible assets subject to impairment accounting, which can lock in losses but not permit upward revaluations under current models - a contrast to funds that apply mark‑to‑market fair value approaches under ASC 820 or equivalent frameworks. Given Bitcoin’s higher realized volatility relative to traditional equities (historically multiples of large‑cap stocks) and episodic liquidity gaps in stressed conditions, regulators and auditors are focused on three technical issues: valuation methodology, disclosure of realized vs. unrealized gains/losses, and robust controls over custody and transfer risk. Consequently, firms should expect granular requests in Form 10‑K/8‑K and audit trails showing provenance of keys, custodial insurance limits, and any hedging programs tied to futures or options.
For practitioners and newcomers alike, the immediate actionable steps are straightforward and practical. First, adopt consistent, prominently disclosed valuation policies that specify whether assets are carried at fair value or historical cost and explain any adjustments such as mNAV; second, implement operational controls over custody with multi‑party key management and independent attestations; and third, stress‑test treasury exposures under scenarios that reflect the asset’s realized volatility and counterparty concentration.Useful starting points include:
- publishing a reconciliation between book value and market value per share;
- providing on‑chain indicators (e.g., UTXO age distributions, wallet concentration, and hash rate trends) to contextualize liquidity and network security;
- and maintaining disclosures on hedging policies and use of derivatives such as futures or options to manage balance‑sheet risk.
Taken together, these measures reduce regulatory friction, improve investor comparability, and help both retail entrants and institutional allocators make informed assessments of the opportunities and risks inherent to Bitcoin exposure.
As NYDIG urges bitcoin treasury companies to abandon the market-adjusted net asset value (mNAV) metric as ”misleading,” the debate over valuation transparency in crypto treasuries has moved from the margins to the mainstream. Whether firms heed the call or defend current practices, the controversy highlights a broader demand from investors, auditors and policymakers for consistent, comparable reporting that accurately reflects on-chain exposures and realized risks.
If industry participants embrace clearer, standardized metrics, investor confidence and market integrity could strengthen; if they resist, expect intensified scrutiny from institutional counterparties and regulators seeking to protect stakeholders. In the near term, watch for formal responses from affected companies, potential accounting guidance or regulatory inquiries, and renewed pressure from custodians and auditors to align disclosures with conventional valuation standards.
We will continue to monitor reactions across the industry and report on any shifts in disclosure practices or regulatory developments arising from this dispute, assessing what changes – if any – will meaningfully improve transparency for those holding bitcoin on corporate balance sheets.
