- Chairman Kelvin Wong warns of inflated DAT share prices.
- Boyaa Interactive and Ourgame International among affected firms.
- India and Australia also move to curb crypto-heavy listings.
Hong Kong’s Securities and Futures Commission (SFC) has stepped up scrutiny of listed companies holding digital asset treasuries (DATs) after evidence emerged that retail investors may have lost billions trading these stocks.
The regulator is concerned that share prices for some companies are trading far above the value of their crypto holdings, raising investor protection and market transparency issues.
The move comes amid growing global unease about corporate exposure to digital assets, with regulators in Hong Kong, India and Australia tightening oversight of companies that integrate cryptocurrencies into their balance sheets.
SFC flags risk of inflated valuations
SFC chairman Kelvin Wong Tin-yau said the regulator is closely monitoring how listed companies manage their crypto assets because some share prices may not reflect the true value of those holdings.
Wong pointed to U.S. examples where firms exposed to digital assets saw valuations rise to more than double the cost of their crypto portfolios.
Research from Singapore-based 10X Research earlier this month suggested retail investors may have collectively lost about $17 billion trading digital-asset treasury firms.
Many losses stemmed from investors buying shares at a premium far above the companies’ net asset values.
Some of Hong Kong’s most active DAT firms, including Boyaa Interactive and Ourgame International, have seen share performance weaken amid cryptocurrency market volatility.
The SFC’s growing concern reflects a broader effort to assess whether such firms pose a risk to financial stability, particularly when share prices are driven more by speculative demand than by operating results.
Regulators act against rebranding attempts
Hong Kong authorities have already taken action against companies attempting to rebrand themselves as crypto-holding entities without substantive business operations to justify the change.
The SFC cited listing rules that limit companies from holding excessive liquid assets, including cryptocurrencies, on their balance sheets without demonstrating a clear operational rationale.
Wong said investors should “fully understand the underlying risks of DATs,” and noted the commission plans to expand public education campaigns to help retail investors understand how digital-asset treasuries work and the market volatility they may face.
After the review, the SFC will decide whether specific guidelines for DATs are needed, as Hong Kong currently lacks a dedicated framework for listed companies that invest directly in cryptocurrencies.
Global caution spreads across markets
Regulatory caution is not limited to Hong Kong. Similar developments have appeared in India and Australia, where exchanges raised concerns about listed companies reallocating large portions of capital into crypto holdings.
In Australia, the Australian Securities Exchange (ASX) restricts listed companies from holding more than 50% of their assets in cash or cash-like instruments, a rule that complicates efforts to build crypto-heavy balance sheets.
In India, the Bombay Stock Exchange recently rejected a listing application from Jetking Infotrain because it proposed allocating funds to digital assets.
Across jurisdictions, regulators are increasingly adapting to the need for clearer oversight of corporate crypto exposure.
Industry worries about unsustainable models
Crypto industry experts have warned that many DAT companies operate without robust governance structures or defined risk controls.
Without clear strategies to manage asset volatility or liquidity shocks, retail investors could face severe losses during market downturns.
While digital-asset treasuries offer companies a way to diversify holdings, regulators argue such moves must be supported by sound business fundamentals rather than speculative enthusiasm.
The SFC’s review marks an important step toward defining how listed companies can responsibly integrate crypto into their financial strategies without exposing shareholders to undue risk.