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Some of the largest stock markets in Asia are taking action against companies that are shifting their business models to digital-asset treasury strategies. The Hong Kong Exchanges and Clearing Ltd. (HKEX) has blocked the intentions of at least five companies that planned to hold vast amounts of cryptocurrency as assets in their core operations.
The exchange mentioned regulations that limit companies with extensive liquid holdings to ensure that listed companies have viable and sustainable operations. The action is indicative of increasing uncertainty in Asia-Pacific markets. The Bombay Stock Exchange in India has recently denied Jetking Infotrain permission to operate after it announced plans to allocate a portion of its capital to crypto assets.
Additionally, the Australian Securities Exchange (ASX) has imposed restrictions that make it nearly impossible to convert the majority of listed companies' balance sheets into crypto assets. ASX asks such companies to consider exchange-traded fund (ETF) designs rather than holding direct investments to comply with listing policies.
The heightened scrutiny arises from a decline in digital-asset treasury (DAT) activity. Firms that have adopted the model, where they own substantial reserves of Bitcoin or Ether, have experienced a decline in their share prices in line with the recent downturn in the crypto market. The price of Bitcoin reached a record high of $126,251 earlier this month, but soon fell to $109,000, and the valuation in the cryptocurrency sector is lower.
Regulators in Hong Kong classify companies that primarily hold cash or other assets, including cryptocurrencies, as “cash companies.” These firms can face suspension or have their listings rejected unless they indicate that digital assets are part of their core business operations. According to legal experts, this regulation works to prevent listed companies in the region from becoming pure crypto-holding vehicles.
Japan is the only country that allows listed companies to hold digital assets. There are 14 publicly traded Bitcoin companies in the country, including Metaplanet Inc., a hotel operator with over $3.3 billion in Bitcoin holdings. Nevertheless, according to the latest changes, the resistance is on the increase even there.
Global index provider MSCI has suggested the removal of large DATs from its international equity indexes, claiming that these companies are similar to investment funds. With the approval, the alteration would decrease institutional inflows and affect the valuation of Japan's crypto-heavy companies. This change shows that the regulatory environment of digital-asset treasuries is narrowing in several markets, even in those that have been largely liberal.
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