Asia’s major stock exchanges are rejecting listings from firms holding excessive Bitcoin, challenging the popular crypto treasury model.
Asia’s three major stock exchanges are actively tightening scrutiny of certain listings. Now the Executive Order specifically addresses crypto asset treasury (DAT) companies. These companies are looking for traditional corporate organization, according to Bloomberg. This opposition directly challenges a major corporate crypto model worldwide. As a result, the market is now closely following regulatory responses throughout the region.
The Hong Kong Stock Exchange (HKEX) has turned down several applications in recent times. At least five such requests were rejected in recent months. The rejections point to existing restrictions on holding an excessive amount of liquid assets.
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Furthermore, these old rules forbid large holdings of highly tradable assets. This is true when a firm changes its core business strategy. The shift for them is toward digital-asset treasury strategies. Therefore, none of these companies have got the listing approval up to now.
Therefore, DATs are met with the same resistance throughout the continent. Similar restrictions have also been promulgated by regulators in India and Australia. This draconian regulatory effort makes the whole model unsustainable.
This disapproval comes at a time when the rally of digital assets is at its peak. Bitcoin reached a new high of US$126,251 on October 6. The token has increased by 18% this year.
These dedicated stockpiling companies were mainly responsible for the surge. The Strategy was created by Michael Saylor who was the first to model the concept. This giant worth US$70 billion spawned hundreds of imitators around the world. However, purchases of DATs have been slowing down significantly in recent times. Their share prices have been declining as well lately. This is in line with a sharp sell-off in broader crypto markets.
Retail investors have lost substantial estimated sums of money. An estimated over US$17 billion has been lost by investors on DAT trades. This alarming rate is reported by 10X Research in Singapore.
Japan is therefore a notable exception to the model. It is the only major Asia-Pacific market that allows DATs unabashedly. Local legal requirements allow firms to retain large cash holdings. This currently provides more flexibility for investment in Bitcoin.
For instance, domestic operator Metaplanet Inc. is one of the major hotel operators. The company currently owns about 3.3 billion worth of Bitcoins. The stock of the company rose like a rocket this early in the year on the news.
However, the stock would drop more than 70% from the top in the years that followed. The downward trend was counted from the peak in June. Japan is currently leading the region with 14 firms listed that hold Bitcoin.
Also, even the DAT-friendly environment in Japan may be evolving. MSCI Inc. currently suggests new exclusions to their indexes. MSCI is one of the world’s biggest index providers. Specifically, the MSCI view is that these DAT-heavy funds are very similar to investment funds. This proposed exclusion would have a significant effect on the flow of capital around the world.
The offering came on the heels of a massive stock sale by Metaplanet recently. The company raised $1.4 billion in September. Most of these proceeds were invested immediately in more Bitcoin. Keeping in view this scenario, the major stock exchanges in Asia are firmly holding on to conservatism. They are defending established traditional rules of corporate listing. This cohesive regulatory drive has far-reaching consequences for the global crypto finance model.
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