- Chairman Kelvin Wong warned about surging DAT share prices.
- Boyaa Interactive and Ourgame International are among affected firms.
- India and Australia are also moving to curb heavy crypto listings.
The Hong Kong Securities and Futures Commission (SFC) has stepped up its scrutiny of listed companies holding digital asset treasuries (DAT) after findings suggested retail investors may have lost billions trading those stocks.
Regulators are concerned that some companies’ share prices may be trading far above the value of their crypto holdings, raising questions about investor protection and market transparency.
This move comes amid growing global unease about corporate exposure to digital assets, with regulators in Hong Kong, India and Australia tightening oversight of firms that integrate crypto onto their balance sheets.
SFC flags risks of inflated stock valuations
SFC chairman Kelvin Wong Tin-yau said regulators are closely monitoring how listed companies manage their crypto assets, noting that some share prices may not reflect the true value of those holdings.
Wong pointed to examples from the United States where companies with digital asset exposure saw valuations surge to more than double the cost of their crypto portfolios.
Research from Singapore-based 10X Research earlier this month indicated retail investors may have collectively lost roughly $17 billion on companies trading as digital asset treasuries.
Most of these losses stemmed from investors buying shares at premiums far above the companies’ net asset values.
Some of the most actively traded DAT firms in Hong Kong, including Boyaa Interactive and Ourgame International, have seen their shares weaken amid crypto market volatility.
The SFC’s growing concern reflects a broader effort to assess whether such firms pose risks to financial stability, particularly when share prices are driven more by speculative demand than by operating performance.
Regulators act against attempted rebranding
Hong Kong authorities have taken steps against companies attempting to rebrand themselves as crypto-holding entities without substantial core operations.
The SFC cited listing rules that restrict companies from keeping excessive liquid assets, including cryptocurrencies, on their balance sheets without clear operational justification.
Wong said investors should “fully understand the underlying risks of DAT,” adding that the commission plans to expand its public education campaign to help retail traders understand how digital asset treasuries work and the market volatility they may face.
Following its review, the SFC will decide whether specific guidelines for DAT are needed, since Hong Kong currently lacks a 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 have raised concerns about listed companies shifting significant capital into crypto holdings.
In Australia, the Australian Securities Exchange (ASX) has prevented listed firms from holding more than 50% of their assets in cash-like instruments, including cash and similar instruments, a rule that complicates attempts to build crypto-heavy balance sheets.
In India, the Bombay Stock Exchange recently rejected a listing proposal from Jetking Infotrain because of plans to allocate funds to digital assets.
Across jurisdictions, regulators are increasingly aligning on the need for clearer oversight of corporate crypto exposure.
Industry concerns about unsustainable models
Crypto industry experts have warned that many DAT companies operate without robust governance structures or well-defined risk controls.
Without clear strategies to manage asset volatility or liquidity shocks, retail investors could face sudden losses during market downturns.
While digital asset treasuries offer companies a new way to diversify holdings, regulators argue such steps must be backed by solid business fundamentals rather than speculative enthusiasm.
The SFC review marks an important step in determining how listed companies can integrate crypto responsibly into their financial strategies without jeopardizing shareholders.