Listed Firms Hit Wall as Hong Kong Rejects Digital Asset Treasury Plans

TLDR:

• The Hong Kong Stock Exchange objected to at least five firms seeking Digital Asset Treasury conversions.
• Listed companies in Hong Kong are currently barred from transforming into pure crypto-holding entities.
• The SFC plans to study whether listed companies can legally invest in or hold Bitcoin as part of operations.
• Investor education on Digital Asset Treasuries will be a core focus as regulators tighten supervision.
  

Hong Kong is putting the brakes on listed companies planning to turn their balance sheets into crypto vaults. 

The city’s regulators are holding off approvals for firms looking to become Digital Asset Treasuries, or DATs. The move reflects growing caution over unregulated corporate exposure to crypto. 

Officials say they want to protect investors before such transformations gain traction. The decision leaves several companies waiting as authorities weigh how far crypto integration should go.

According to a report from Wen Wei Po, Hong Kong’s stock exchange has already objected to at least five firms pursuing DAT status. None of them received approval. 

The exchange currently bars listed entities from transforming into businesses that mainly store cryptocurrencies. Wu Blockchain shared details of the policy shift on social media, adding that Hong Kong plans to release new guidance on Digital Asset Treasuries soon.

Regulators Warn of Risks in Corporate Crypto Holdings

Securities and Futures Commission (SFC) Chairman Wong Tin-yau said there are no existing laws that allow listed companies to operate as crypto treasuries. He acknowledged that several firms had expressed interest in doing so. 

According to Wong, regulators must first study market conditions and determine if formal guidelines are necessary.

He added that Hong Kong lacks legislation to govern corporate crypto holdings, making investor protection critical. Wong emphasized that many investors in the city do not fully understand how DAT models work. 

He said some firms in the U.S. have seen inflated valuations after converting cash into digital assets. Regulators in Hong Kong are therefore cautious about similar outcomes in local markets.

Wong warned that inflated valuations could collapse if new rules are introduced, wiping out premiums “within a day.” He said education will be key before any official approval or regulatory clarity emerges. 

The SFC plans to collaborate closely with the stock exchange to set clear standards on what’s acceptable for listed firms.

Crypto Guidelines Under Review

Regulators are also exploring how much exposure listed firms can legally have to crypto. Wong questioned whether a company could buy even a single Bitcoin under the current rules. He pointed out that until new regulations exist, defining a red line is difficult.

Authorities are considering how to balance innovation with market safety. The SFC is also reviewing Hong Kong’s dual-class share mechanism to attract more tech firms without compromising investor rights. 

Officials say any change will aim to strengthen trust in the city’s financial framework.

For now, Hong Kong’s message is clear: listed companies will have to wait before turning their treasuries into crypto holdings. The city’s next steps will determine whether it follows the U.S. path of corporate crypto integration or builds a stricter model of its own.[:]

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