SFC warns investors as Hong Kong halts DAT listings, citing crypto volatility and lack of regulation; future Bitcoin treasury rules under review.
Hong Kong’s financial regulators are taking a firm stance against companies trying to operate solely as cryptocurrency holders. The Hong Kong Stock Exchange (HKEX) has reportedly raised objections to at least five firms planning to transform into Digital Asset Treasuries (DATs), and so far, none have received approval to list.
This move highlights Hong Kong’s cautious approach toward crypto investment. While the U.S. has seen a growing number of firms converting parts of their balance sheets into cryptocurrencies, Hong Kong’s regulators have made it clear that such transitions are not permitted under the city’s existing rules. Currently, there are no specific laws governing listed companies’ participation in digital assets, a gap that authorities are closely examining.
A Digital Asset Treasury (DAT) is a company that manages or stores a large portion of its capital in cryptocurrencies such as Bitcoin (BTC) or Ethereum (ETH). In the U.S., several companies have either been founded as DATs or shifted to this model after achieving strong profits from digital assets.
Experts note that when U.S. companies make major crypto purchases, say, investing $1 billion in Bitcoin their market capitalization often doubles due to investor excitement. However, this surge is largely speculative and highly volatile, prompting regulators to tighten oversight and implement new crypto holding rules.
Wong Tin-yau, Chairman of the Securities and Futures Commission (SFC), claimed that Hong Kong currently lacks a clear legal framework for crypto-based treasury operations. He warned investors to fully understand the risks before investing in such companies, noting that Digital Asset Treasuries carry high volatility and regulatory uncertainty.
Wong added that if these companies were ever brought under formal regulation, the price premium their shares enjoy could “disappear overnight.” He also said that improving crypto investor education is now one of the SFC’s top priorities, as many retail investors fail to grasp the risks associated with the DAT structure.
Although Hong Kong currently bars companies from listing as Digital Asset Treasuries, Wong said the SFC plans to study the issue and explore potential crypto regulation updates. For now, there’s no defined threshold on how much cryptocurrency a listed company can hold, whether it’s one Bitcoin or one hundred.
Separately, the SFC also intends to review the city’s dual-class share (WVR) system to make it more flexible for tech companies, while ensuring fair treatment for minority shareholders.
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