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Hong Kong Regulator Tightens Watch on Crypto Treasuries, Plans Public Awareness Push

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Hong Kong’s markets regulator has moved to rein in listed firms leaning on digital asset treasuries, stepping up oversight whereas getting ready a public training push to warn retail traders concerning the dangers.

Speaking at a media briefing on Tuesday, Securities and Futures Commission chair Kelvin Wong Tin-yau mentioned the company is monitoring how listed corporations use cryptocurrencies to handle extra money or pivot towards digital belongings as a core enterprise.

“The SFC is anxious about whether or not DAT firms’ share costs are traded at a considerable premium above the price of their DAT holdings,” he mentioned, in keeping with the South China Morning Post.

Hong Kong Firms Face Tighter Scrutiny Over Crypto Treasury Pivots

Wong pointed to instances within the US that “confirmed that the premium could possibly be very high, which can add dangers to traders buying and selling in these shares”. He added that many Hong Kong retail traders might not totally perceive the dangers tied to digital asset treasury, or DAT, methods.

Attention has sharpened after the Hong Kong Exchanges and Clearing reportedly challenged plans from at least five companies in search of to pivot to DAT-focused fashions as their important enterprise, citing guidelines that limit extreme holdings of liquid belongings.

Similar proposals confronted resistance in India and Australia, reflecting regulatory unease with listed corporations that tether valuations to risky token balances moderately than working money flows.

US Examples Show How Crypto Holdings Can Distort Equity Valuations

“The SFC is carefully monitoring DAT developments,” Wong mentioned. “We warning traders to totally perceive the underlying dangers of DAT.” He mentioned the fee will strengthen public consciousness and investor training on DAT and its dangers.

The push comes as some US-listed firms that maintain massive swimming pools of Bitcoin have at occasions traded at notable premiums to the worth of their coin holdings, amplifying boom-and-bust cycles for shareholders.

These episodes confirmed how fairness costs can drift away from internet asset worth when sentiment, leverage and momentum collide, creating an unstable hyperlink between an organization’s core operations and its crypto stability sheet.

DAT’s attraction is simple, treasury managers see liquid tokens in its place retailer of worth and a advertising sign to crypto-savvy clients. For listed issuers, nevertheless, regulators fear that heavy token publicity can blur disclosures, complicate fair-value accounting and inflate market caps throughout rallies, then enlarge drawdowns throughout downturns.

Regulators Tighten Rules To Prevent Listed Firms From Mimicking Crypto Funds

Digital asset treasuries have gained traction amongst a slim set of US corporations and crypto-native companies. They have been much less common in markets the place guidelines restrict listed firms from holding outsized liquid belongings or the place change operators scrutinise enterprise pivots that lack clear working substance.

India and Australia match that sample, with exchanges and regulators taking a conservative line on token-heavy stability sheets.

Hong Kong has courted digital asset exercise via a licensing regime and the debut of spot crypto exchange-traded funds, in search of to channel demand into regulated venues.

Officials now seem intent on drawing a vivid line between regulated market infrastructure and listed issuers that rely on speculative token holdings to drive valuations.

The submit Hong Kong Regulator Tightens Watch on Crypto Treasuries, Plans Public Awareness Push appeared first on Cryptonews.

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