- 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 its scrutiny of listed companies holding digital asset treasuries (DATs) after findings suggested retail investors may have lost billions trading these stocks.
The regulator is concerned that some companies’ share prices may be trading well above the value of their crypto holdings, raising questions about investor protection and market transparency.
The move comes amid growing global unease over corporate exposure to digital assets, with regulators in Hong Kong, India and Australia tightening oversight of firms that integrate cryptocurrency into their balance sheets.
SFC flags risk of inflated share valuations
SFC chairman Kelvin Wong Tin-yau said the commission is closely monitoring how listed companies manage their crypto assets, noting that some stock prices might not reflect the true value of those holdings.
Wong pointed to examples in the United States where companies exposed to digital assets saw valuations rise to more than double the cost basis of their crypto portfolios.
Research from Singapore-based 10X Research earlier this month indicated retail investors may have lost roughly $17 billion in aggregate trading digital asset-linked stocks.
Many of those losses came from investors who bought shares at a premium far above the company’s net asset value.
Some of Hong Kong’s most active DAT firms, including Boyaa Interactive and Ourgame International, have seen share performance weaken amid crypto market volatility.
The SFC’s growing concern reflects a broader effort to assess whether such companies pose a risk to financial stability, particularly when share prices are driven more by speculative demand than by operational performance.
Regulators push back on rebranding attempts
Authorities in Hong Kong have already acted against companies that try to rebrand themselves as crypto-holding entities without substantial underlying business activity.
The SFC cited listing rules that restrict 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 added that the commission plans to expand public education campaigns to help retail investors grasp how digital asset treasuries work and the market volatility they may face.
Once its review is complete, the SFC will decide whether specific rules are needed for DATs, as Hong Kong currently lacks a tailored framework governing listed companies that invest directly in cryptocurrencies.
Global caution spreads across markets
Regulatory caution is not limited to Hong Kong. Similar developments have emerged recently in India and Australia, where exchanges raised concerns about listed firms shifting large portions of capital into crypto holdings.
In Australia, the Australian Securities Exchange (ASX) limits 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 proposal from Jetking Infotrain because the plan involved allocating funds to digital assets.
Across jurisdictions, regulators are increasingly adjusting rules to demand clearer oversight of corporate crypto exposure.
Industry worries about unsustainable models
Crypto industry experts have raised concerns that many DAT companies operate without robust governance frameworks or defined risk controls.
Without clear strategies to manage asset volatility or liquidity shocks, retail investors may face significant losses during market downturns.
While digital asset treasuries offer companies a new 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 in defining how listed companies can responsibly integrate crypto into their financial strategies without putting shareholders at undue risk.