Stock exchanges in India, Hong Kong, and Australia have reportedly started to block or limit companies from becoming digital asset treasury vehicles.
Hong Kong Exchanges & Clearing Ltd. has denied at least five companies seeking to become DATs, pointing to regulations against “cash companies” primarily holding liquid assets, according to a Bloomberg report on Wednesday, citing anonymous sources.
The Bombay Stock Exchange rejected a listing application last month from a company after it revealed plans to invest its proceeds in crypto.
In addition, Australia’s ASX prevents companies from allocating more than half of their balance sheets to cash-like assets such as crypto, rendering DAT models “virtually impossible.”
ASX-listed firms that shift toward crypto investments “are advised to consider structuring their offering as an exchange-traded fund,” stated a spokesperson.
Japan is the outlier
Japanese stock exchanges continue to welcome the concept. Japan permits DATs with proper disclosure and hosts the most in Asia—14 listed Bitcoin (BTC) buyers, including the world’s fourth-largest Bitcoin DAT, Metaplanet.
However, MSCI, one of the world’s leading index providers, is looking to exclude large DATs with over 50% crypto holdings from its indexes, which could limit passive investment flows.
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Cointelegraph reached out to all three stock exchanges but did not receive an immediate reply.
Companies accused of selling their listed status
Some exchanges have raised concerns that these companies are selling their “listed status” rather than operating legitimate businesses, as reported by Bloomberg.
There is also the “cash company” issue with firms primarily holding liquid assets, potentially resembling empty shell companies that could serve improper purposes.
Regulators also want listed companies to have genuine operations, not just act as investment vehicles holding assets, it noted.
Crypto treasury model on thin ice
DATs arguably drove crypto markets this year, but many are currently struggling, trading at or below their net asset values (NAVs) as markets have heavily corrected.
Researchers at 10x Research indicated that the “age of financial magic is ending for Bitcoin treasury companies,” highlighting declining share prices, especially at Metaplanet.
Even BitMine chair Tom Lee suggested earlier this month that the DAT bubble might have burst.
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