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Hong Kong warns retail investors on digital asset treasury risks

The post Hong Kong warns retail investors on digital asset treasury risks appeared com. Hong Kong regulators have blocked at least five public companies from pivoting to digital asset treasury models, as they weigh whether formal guardrails are needed to curb valuation bubbles and protect retail investors. Summary Hong Kong’s securities regulator has blocked at least five listed companies from shifting to digital asset treasury models amid concerns over inflated valuations. The SFC is studying whether new guidelines are needed for listed companies holding crypto. Local media reports citing Hong Kong’s Securities and Futures Commission chairman, Kelvin Wong Tin-yau, claim the agency is monitoring how listed firms manage digital asset treasuries, as they are concerned about inflated share prices that may not reflect underlying crypto holdings. “The SFC is concerned about whether DAT companies’ share prices are traded at a substantial premium above the cost of their DAT holdings,” Wong said, as he highlighted examples from the United States where his agency observed that some listed companies holding crypto saw their market valuations soar to more than double the cost of their digital assets. According to findings published by Singapore-based 10X Research earlier this month, retail investors may have lost an estimated $17 billion trading digital asset treasury companies, as many shareholders overpaid for crypto exposure by purchasing company shares at a significant premium to the company’s net asset value. Some of the major Hong Kong-based DATs, such as Boyaa Interactive and Ourgame International, have also seen their share prices struggle in recent times, with the crypto market’s volatility over the past few months adding to the pressure. As such, Hong Kong regulators are taking a more cautious stance toward listed firms shifting into digital asset treasury strategies, and have already moved against several attempts to rebrand traditional businesses into crypto-holding vehicles without clear operating substance, citing listing rules that restrict companies from holding.