DeFi Technologies (NASDAQ:DEFT) reported lower second-quarter revenue and assets under management as digital-asset prices declined, while the company pointed to positive fund inflows, cost reductions and progress on institutional product initiatives.
Chief Executive Officer Johan Watn said volatile cryptocurrency markets reduced assets under management and contributed to mark-to-market adjustments that weighed on reported results. Still, he said the company’s underlying businesses continued to advance, with a focus on expanding products, institutional capabilities and market share during the downturn.
Assets Under Management and Revenue Decline
Paul, who presented the company’s financial results, said average assets under management during the quarter totaled approximately CAD 471.5 million, while quarter-end AUM was CAD 397.2 million. Lower digital-asset prices pressured AUM, consistent with broader conditions in crypto markets.
The company’s Valour exchange-traded product business generated CAD 22.8 million in net inflows during the quarter despite the weaker market environment. DeFi Technologies ended the period with 102 ETPs and structured products, and management said it aims to add roughly eight more products during the third quarter.
Revenue was CAD 7.8 million, down from CAD 11.2 million in the prior period. The decline reflected lower average AUM as well as unfavorable mark-to-market adjustments on digital-asset holdings that are recognized in revenue under the company’s broker-dealer accounting structure.
Valour’s effective management-fee yield was about 1%, unchanged from the prior period. Paul said the result reflected a larger weighting of Bitcoin-related products, which carry lower or no management fees, along with continued weakness in altcoin markets. Its effective staking yield declined to 2.4%, affected by lower asset prices, compressed Bitcoin and Ethereum lending rates, and changes in the mix of staking assets.
Management said approximately CAD 11 million of inflows into Hedera-related products represented a meaningful portion of the quarter’s overall inflows. Executives also said inflows were otherwise broad-based across products and supported by marketing, sales and institutional outreach.
Institutional Outreach and New Product Plans
Andrew said more than 40% of quarterly inflows were directly attributable to institutional events and outreach. He cited discussions that began at the company’s Abu Dhabi event in December 2025 and closed during the second quarter.
Management said it has developed systems to track product flows and competitive activity, while expanding relationships with broker-dealer platforms and institutional investors. Andrew said the company has also built proprietary data-driven tools designed to assess the relationship between Valour’s individual and index products and broader financial markets.
DeFi Technologies is preparing to launch its first hedge fund, referred to during the call as the Smart Crypto Fund. Watn said onboarding with key trading partners had been completed and that no formal obstacles remained. He said the launch could occur within one to three weeks and was expected during the third quarter.
The company is also pursuing a UCITS fund structure in Europe. Watn said the Swedish Financial Supervisory Authority did not approve the company’s initial proposal, prompting an appeal and a renewed Swedish application. DeFi Technologies is also developing a Luxembourg-based structure. Management said it hopes to establish the platform this year, but noted that a Luxembourg route could require several additional months.
Other planned initiatives include the expansion of arbitrage strategies in the second half of the year and a targeted beta launch of the Valour custody platform. Management said the initial custody deployment is intended to bring capabilities in-house, lower third-party custody expenses and improve margins. The company is also using artificial intelligence to improve operations and develop AI-enabled investment products.
Liquidity, Investments and Expense Targets
DeFi Technologies ended the quarter with total liquidity of CAD 119.8 million. This included CAD 60.3 million in cash and cash equivalents, CAD 19.1 million in Stretch preferred shares and RWUSD financial assets, CAD 10.4 million in USDT and USDC tokens, and CAD 30 million in digital-asset treasury holdings.
Paul said the lower cash balance compared with the first quarter partly resulted from the purchase of CAD 20 million of MicroStrategy Stretch preferred shares, representing 200,914 shares. He said the shares yield 12%, compared with roughly 3.5% on the company’s short-term U.S. Treasury bill holdings. The investment is recorded as an investment at fair value through profit and loss rather than as cash equivalents under IFRS.
The company’s results also included CAD 16.3 million of negative mark-to-market adjustments on its venture portfolio and Stretch preferred shares. Paul said most of the adjustment related to the markdown of DeFi Technologies’ 5% investment in AMINA Bank, reflecting lower AUM and compressed enterprise-value-to-AUM valuation multiples among peers.
General and administrative expenses plus fees and commissions, described as the company’s main cash costs, totaled CAD 8 million, down CAD 1.6 million from CAD 9.6 million in the first quarter. Management said it is targeting annualized cash operating costs of CAD 36 million to CAD 39 million, though it indicated costs could trend toward the lower end of that range.
Management estimated that the company would need approximately CAD 550 million in AUM and a 4.25% monetization rate to break even under its targeted cost structure. Executives said Bitcoin and Ethereum represented 46% of AUM, while Bitcoin, Ethereum and Solana combined accounted for 69.8%, a mix that can reduce monetization rates during weaker crypto markets.
Stillman Digital and Capital Allocation
Stillman Digital generated approximately CAD 5.4 million in revenue during the first half of 2026, up 30.2% year over year, according to management. Paul said its revenue is driven by trading volumes and realized spreads rather than directly by cryptocurrency prices, and that the business was on pace for a record revenue year.
When asked about share repurchases, Watn said the company’s priority is using capital to grow operations, launch products and pursue potential acquisitions. Management said it is reviewing an active pipeline of possible M&A opportunities but remains selective.
The company also said it plans to apply on Sept. 1 for an additional 180-day Nasdaq compliance extension. Management said Nasdaq had indicated that DeFi Technologies qualifies to seek the extension, though formal approval would depend on the submitted application.
About DeFi Technologies (NASDAQ:DEFT)
DeFi Technologies Inc is a Vancouver-based company focused on decentralized finance (DeFi) and digital asset investments. Through strategic equity stakes and token allocations, the company aims to provide investors with exposure to leading DeFi protocols, applications, and infrastructure projects. Its core activities include sourcing, evaluating and acquiring positions in blockchain-based platforms that facilitate decentralized lending, trading, yield farming and liquidity provision.
In addition to its investment portfolio, DeFi Technologies works to develop and distribute tokenized products that bridge traditional capital markets with emerging DeFi ecosystems.
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