Hong Kong’s top securities regulator has issued a strong warning over the growing trend of Digital Asset Treasuries (DATs), listed companies that hold significant amounts of cryptocurrency on their balance sheets.
The Securities and Futures Commission (SFC), led by Chairman Kelvin Wong Tin-yau, announced that it is now monitoring companies with large crypto holdings and plans to issue new guidance to curb potential risks.
SFC Flags Premium Valuations and Retail Investor Exposure
Wong expressed particular concern about companies whose share prices trade at a premium far exceeding the underlying value of their crypto assets. The SFC fears this could mislead investors and expose them to unnecessary volatility.
Citing examples from the U.S., Wong noted that speculative interest has often driven share prices of “crypto-heavy” firms far beyond their fair market value. He emphasized that the same risks could arise in Hong Kong, where the retail investor base may not fully understand the complexities of digital asset valuations.
In response, the SFC said it will increase investor education around crypto-related listed firms and highlight the potential dangers of investing in companies with unstable digital asset treasuries.
Regulatory Gaps and Pending Guidance
Currently, Hong Kong lacks a dedicated regulatory framework for managing digital asset treasuries, Wong admitted. The SFC plans to study the need for new legislation or formal rules that would establish clearer oversight and reporting requirements for companies engaging in this practice.
Importantly, the regulator reiterated that no listed firm in Hong Kong is permitted to operate solely as a Digital Asset Treasury. While the city has positioned itself as a hub for Web3 and tokenization, officials remain wary of excessive exposure to crypto market volatility and the potential for speculative manipulation in equity prices.
HKEX Blocks DAT-Focused Listing Plans
Wong’s remarks come as the Hong Kong Stock Exchange (HKEX) has reportedly rejected listing proposals from at least five companies attempting to build their businesses primarily around digital asset holdings.
Under HKEX rules, firms cannot hold large liquid positions in volatile assets such as Bitcoin or Ethereum as their main operational strategy. The exchange considers such activity inconsistent with listing requirements designed to protect investors and preserve market stability.
This stance reflects Hong Kong’s cautious but progressive approach, fostering innovation while limiting speculative excesses in the public markets.
Part of Hong Kong’s Broader Digital Asset Framework
The SFC’s latest move builds on its ongoing regulatory evolution across the digital asset sector. Over the past two years, the regulator has introduced frameworks for tokenized securities, stablecoins, and virtual asset service providers (VASPs).
These efforts are part of Hong Kong’s ambition to establish itself as a leading digital finance hub, attracting global fintech and blockchain firms while upholding investor protection and transparency standards.
Wong concluded that the SFC’s review of Digital Asset Treasuries will focus on ensuring fair valuation practices, clear disclosure, and risk management safeguards for both investors and the broader market.