- Chairman Kelvin Wong warns about inflated valuations of DAT stocks.
- Among affected firms are Boyaa Interactive and Ourgame International.
- India and Australia are also moving to curb listings with large cryptocurrency treasuries.
The Securities and Futures Commission (SFC) in Hong Kong has stepped up scrutiny of listed companies that hold digital asset treasuries (DATs) after findings suggested retail investors may have lost billions trading those stocks.
The regulator is concerned that share prices of some companies might be trading well above the underlying value of their cryptocurrency holdings, raising questions about investor protection and market transparency.
This move comes amid growing global concern over 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 stock valuations
SFC Chairman Kelvin Wong Tin-yau said the regulator is 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 U.S. examples where firms exposed to digital assets saw their crypto portfolio valuations more than double, creating a disconnect between market prices and underlying net asset values.
Research from 10X Research in Singapore earlier this month found retail investors may have collectively lost around $17 billion trading firms with digital asset exposure.
Much of these losses were linked to investors buying shares at premiums that far exceeded the companies’ net asset values.
Some of the most active DAT companies listed in Hong Kong, including Boyaa Interactive and Ourgame International, have seen their share prices decline amid cryptocurrency market volatility.
The SFC’s growing concern reflects wider efforts to determine whether such companies pose risks to financial stability, particularly when share prices are driven more by speculative demand than by operating performance.
Regulators push back on rebranding attempts
Authorities in Hong Kong have already taken steps against companies trying to rebrand as crypto holding entities without substantial operating businesses.
The SFC referenced listing rules that limit companies from holding excessive liquid assets, including cryptocurrencies, on their balance sheets without clear operational justification.
Wong said investors should “fully understand the underlying risks associated with 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.
After completing its review, the SFC will determine whether specific guidelines for DATs are required, noting that Hong Kong currently lacks a regulatory 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 emerged this month in India and Australia, where exchanges have expressed concerns about listed firms shifting large portions of capital into cryptocurrency holdings.
In Australia, the Australian Securities Exchange (ASX) restricts listed entities from holding more than 50% of their assets in cash or cash-like instruments, a rule that complicates efforts to build balance sheets heavy with cryptocurrencies.
In India, the Bombay Stock Exchange recently rejected a listing proposal from Jetking Infotrain over plans to allocate funds to digital assets.
Across jurisdictions, regulators increasingly agree on the need for clearer oversight of corporate exposure to cryptocurrencies.
Industry worries over unsustainable models
Cryptocurrency industry experts have warned that many DAT operators lack robust governance structures or defined risk controls.
Without clear strategies to manage asset volatility or liquidity shocks, retail investors could suffer steep losses during market downturns.
While digital asset treasuries offer companies a new route to diversify their holdings, regulators insist such moves must rest on sound business fundamentals rather than speculative enthusiasm.
The SFC’s review is an important step toward clarifying how listed companies can responsibly incorporate cryptocurrencies into their financial strategies without putting shareholders at undue risk.