Hong Kong exchange questions DAT transformation plans of multiple companies
The Hong Kong Stock Exchange has “blocked” the transformation plans proposed by at least five listed companies seeking to convert into digital asset treasuries. Authorities told reporters that Hong Kong lacks legislation regulating listed companies’ participation in cryptocurrency investment or treasury arrangements.
A regulator explained that the authority is monitoring market developments closely and will issue a directive if new guidance is needed to safeguard investors.
### Growing Popularity of the Digital Asset Treasury (DAT) Model
“The DAT model has gained popularity in the United States,” said Huang, referencing the trend of firms that allocate cash reserves to buy digital assets as treasury holdings. “There are many documents and analyses showing that when a company buys $1 billion in virtual currencies, its market value can rise by more than double. But that situation is also under review in the United States.”
Huang, chairman of the China Securities Regulatory Commission (CSRC), also warned that most local investors have little understanding of what DATs actually are.
“As a regulatory agency, investor education is essential,” he stressed. “After education, investors will realize that stock prices and valuations of companies transforming into DATs often carry significant premiums. If these activities become officially regulated one day, those premiums could disappear overnight,” he surmised.
He added that if any DAT company were to apply for a Hong Kong initial public offering (IPO), the firm would have to fully convince both the CSRC and the Stock Exchange during the approval process.
“It should be impossible to list it in Hong Kong in the form of a DAT right now,” he said.
### Regulatory Grey Zone on Digital Asset Treasury Limits
Huang further explained that the absence of clear rules makes it difficult to determine how far a listed company can go in purchasing digital assets with its cash reserves.
“Are we not allowed to buy one Bitcoin? What about ten? What about a hundred?” he asked. “If all corporate cash were converted into Bitcoin, could that be justified simply because Bitcoin is a liquid asset?”
The regulator has confirmed that Hong Kong’s “same share, different rights” (WVR) mechanism, introduced in 2018, is currently under review. The city’s Chief Executive announced in this year’s policy the intention to optimize the system to better accommodate high-quality innovation and technology companies.
Huang emphasized that the review would be comprehensive, with the primary objective of protecting small shareholders and distinguishing legitimate innovation firms from exploitation.
“The first principle is to ensure that the interests of minority shareholders are not infringed,” he concluded.
### Hong Kong Crypto Businesses Worried About Stablecoin Law Enforcement
The city’s regulatory caution over DAT structures comes against the backdrop of Hong Kong’s efforts to build a regulated digital asset ecosystem.
In August, the government introduced new legislation to allow licensed entities to issue stablecoins—cryptocurrencies pegged to real-world currencies like the US dollar.
However, economists believe Hong Kong is “too cautious” about its stablecoin laws, which runs counter to the expansion seen in the United States after the West imposed similar crypto-friendly regulatory frameworks.
Recent reports suggest that Beijing’s increased involvement in digital asset oversight has cast uncertainty over Hong Kong’s crypto trajectory.
The People’s Bank of China (PBOC) reportedly summoned several mainland firms under its jurisdiction—including banks and non-bank payment providers—instructing them to hold off on stablecoin initiatives until further notice.
The Financial Times reported that Ant Group and JD.com were among the firms told not to proceed with their stablecoin projects.
According to individuals familiar with the matter cited by the Financial Times, some of these potential issuers were once enthusiastic about applying for Hong Kong’s first stablecoin licenses but have now adopted a wait-and-see stance.
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