The surge of companies adding cryptocurrencies to their balance sheets may be hitting a plateau, according to Galaxy Digital GLXY CEO Michael Novogratz.

What Happened: Speaking during the firm’s second-quarter earnings call, Novogratz said the peak of new treasury firms entering the space may already be behind us, shifting attention toward which existing players can scale and dominate the market, Bloomberg reported.

Treasury companies, which raise capital publicly and hold assets like Bitcoin BTC/USD, Ethereum BTC/USD, and Solana BTC/USD, gained popularity amid a more supportive U.S. regulatory environment.

While early entrants mirrored Michael Saylor's Bitcoin-centric playbook, newer firms are diversifying into a broader set of crypto assets.

Novogratz highlighted Ethereum treasury holders such as BitMine BMNR and SharpLink SBET, led respectively by Tom Lee and Joe Lubin, as examples of firms with staying power.

He cautioned that newer projects might struggle to gain traction as competition for capital and visibility intensifies.

Galaxy currently manages digital assets for more than 20 such crypto treasury firms, earning steady management fees in the process.

These partnerships have brought approximately $2 billion in assets under the Galaxy umbrella, contributing to what Novogratz called a stable stream of recurring revenue.

Also Read: Fundstrat’s Tom Lee: Owning Bitcoin Is Like Owning Land Under A McDonald’s

Why It Matters: The remarks came as Galaxy Digital posted a second-quarter profit of $30.7 million, a sharp turnaround from its $177 million loss during the same period last year.

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However, earnings per share came in at $0.08, falling short of analyst expectations due to lower trading volumes in spot markets.

The company's stock was down 7% midday in New York.

Novogratz sees crypto treasury vehicles and ETFs as a low-risk entry point for hedge funds hesitant to hold tokens directly.

He believes legacy financial institutions will eventually adopt blockchain-based infrastructure, though hurdles remain.

One key challenge is asset tokenization, transferring traditional securities like stocks onto blockchain rails.

Novogratz referenced "Project Crypto," a Securities and Exchange Commission initiative led by Paul Atkins, which aims to chart a course for U.S. market migration to blockchain tech.

Still, many questions around liquidity and market structure for tokenized assets remain unresolved.

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