New Reviews on Digital Asset Treasures in Hong Kong

The Hong Kong Securities and Futures Commission (SFC) has started reviewing companies' Digital Asset Treasury (DAT) activities. Following this review, new regulations are anticipated. SFC Chairman Kelvin Wong Tin-yau stated that they are closely monitoring companies' digital asset management practices.

Wong pointed out that the stock prices of publicly traded companies are trading at a "high premium" compared to the cost of their digital assets, which poses a serious risk to investors. He expressed that some investors do not fully understand the risks associated with companies operating under the DAT model, stating, "Investors need to fully grasp the risks inherent in DATs."

The SFC also mentioned that they will take steps to enhance investor education in this area. Wong emphasized that there is currently no clear regulation for DATs in Hong Kong and announced that the Commission will explore the necessity for new guidelines. The DAT model refers to companies holding a portion of their cash reserves in cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). This strategy, which has gained popularity in the U.S., faced rejection of DAT-based business plans from at least five companies on the Hong Kong Stock Exchange. The exchange management stressed that current rules restrict the "holding of highly liquid assets" policy.

The new steps to be taken by Hong Kong regulators could play a critical role in shaping the approach to institutional crypto asset management in Asia.