- Hong Kong Stock Exchange rejects at least five firms seeking Digital Asset Treasury status.
- SFC Chairman Wong Tin-yau warns DAT premium could disappear “within a day.”
- HK currently prohibits listed companies from transforming into pure crypto holders.
Hong Kong regulators have intensified scrutiny of listed companies attempting to adopt Digital Asset Treasury strategies. The Hong Kong Stock Exchange has rejected applications from at least five companies seeking to change into entities focused on cryptocurrency holdings.
According to media reports citing sources, none of the companies pursuing DAT conversions have received listing approval from the exchange. Hong Kong currently prohibits listed companies from transforming into operations that primarily accumulate digital currencies.
Regulatory framework remains undefined
SFC Chairman Wong Tin-yau stated that Hong Kong lacks regulations governing listed companies’ participation in cryptocurrency investment. He indicated the SFC will monitor market conditions and study whether guidance needs to be provided to the market regarding these activities.
Wong noted that the DAT model has operated in the United States for an extended period. Some companies list as DATs while others convert to this structure after observing profitability. U.S. listed companies allocate cash to purchase digital assets and establish treasury arrangements under this framework.
The chairman pointed to analyses showing that when companies purchase digital assets, the resulting stock price and market capitalization often exceed double the investment amount. “For example, purchasing $1 billion in virtual currencies, the resulting stock price and market capitalization are often more than double, that is, more than $2 billion,” Wong explained.
Hong Kong’s lack of legislation regulating listed companies’ involvement in digital asset treasury arrangements creates challenges for oversight. Wong acknowledged that some listed companies are tempted to engage in such activities, making cooperation between the SFC and the Hong Kong Stock Exchange critical.
Investor education identified as priority
The chairman urged investors to exercise caution and understand what DAT represents and its underlying value if listed companies attempt such arrangements. He believes most Hong Kong investors lack understanding of DAT, making investor education crucial for the regulatory body.
For companies applying for IPOs as DATs in Hong Kong, Wong confirmed a mechanism exists within the approval process. Companies must fully convince the SFC and Hong Kong Stock Exchange to pass review.
Related: https://coinedition.com/bitwise-ceo-teases-big-week-hinting-at-major-progress-in-sol-etf-application-process/
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Source: https://coinedition.com/hong-kong-regulators-tighten-oversight-on-listed-firms-buying-bitcoin/
