Asian Stock Markets Tighten Restrictions on Crypto Treasury Corporations

Stock exchanges in India, Hong Kong, and Australia are reportedly imposing restrictions on companies attempting to act as digital asset treasury vehicles.

Hong Kong Exchanges & Clearing Ltd. has denied requests from at least five companies aspiring to become Digital Asset Treasuries (DATs), referencing rules against cash companies that primarily hold liquid assets. The Bombay Stock Exchange also turned down a listing application last month from a firm intending to invest its proceeds into cryptocurrencies.

Similarly, Australia’s ASX prohibits firms from keeping over half of their balance sheets in cash-like assets, such as cryptocurrencies, effectively rendering DAT models “impractical.” A representative mentioned that ASX-listed companies looking to move into crypto should think about establishing their offers as exchange-traded funds.

Japan is the Exception

Japanese stock exchanges are still open to the notion and allow DATs with appropriate disclosures, housing the largest number of such entities in Asia. They have 14 listed Bitcoin buyers, including Metaplanet, the world’s fourth-largest Bitcoin DAT.

However, MSCI, a leading index provider, plans to exclude large DATs with over 50% crypto holdings from its indexes, which could restrict passive investment flows.

Cointelegraph sought responses from the three stock exchanges but did not receive feedback promptly.

Concerns About Legitimacy

Some exchanges are worried that these companies might be capitalizing on their status as listed firms rather than operating genuine businesses. Concerns about the cash company issue persist, as firms holding mostly liquid assets could appear to be shell companies created for questionable purposes. Authorities also require listed companies to undertake actual operations instead of merely serving as investment vehicles holding assets.

The Future of Crypto Treasury Models

While DATs have significantly influenced crypto markets this year, many are now struggling, trading at or below their net asset values (NAVs) due to market corrections.

Experts at 10x Research mentioned that the “age of financial magic is concluding for Bitcoin treasury companies,” pointing to declining stock prices, particularly for Metaplanet. Even Tom Lee, chair of BitMine, hinted this month that the DAT bubble may have burst.