Hong Kong Regulator Sounds Alarm on Corporate Crypto Treasuries

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Hong Kong’s top securities regulator is raising red flags over how listed companies manage their digital asset treasuries (DAT), warning of inflated stock prices and investor risks, and signaling a potential crackdown with new guidelines.

The Securities and Futures Commission (SFC) is studying the operations of corporate digital asset treasuries and exploring whether specific regulations are necessary, according to local media reports.

Kelvin Wong Tin-yau, the SFC’s chairman, highlighted the agency’s concerns during a media briefing on Tuesday. He pointed to U.S. cases where companies holding cryptocurrencies saw their shares trade at a “substantial premium” above the value of their digital assets, exposing investors to unnecessary risks.

“The SFC is concerned about whether DAT companies’ share prices are traded at a substantial premium above the cost of their DAT holdings,” Wong was quoted as saying by the South China Morning Post.

Wong further cautioned that retail investors may lack a full understanding of the risks associated with these companies. “We caution investors to fully understand the underlying risks of DAT,” he stated, adding that the SFC will intensify its investor education efforts on the topic.

Currently, Hong Kong has no specific regulations governing companies’ digital asset treasury arrangements. In light of the identified risks, Wong confirmed that the SFC will formally study the necessity of establishing dedicated guidelines for DATs.