Hong Kong's top regulator flags digital asset treasury risks: report

Hong Kong's securities watchdog is studying how listed companies operate digital asset treasuries (DAT) and exploring whether relevant guidelines are necessary, local media reported.

Kelvin Wong Tin-yau, the chairman of Hong Kong's Securities and Futures Commission, said in a Tuesday media briefing that the agency is closely monitoring how firms manage their digital asset treasuries, the South China Morning Post reported today.

"The SFC is concerned about whether DAT companies’ share prices are traded at a substantial premium above the cost of their DAT holdings," Wong reportedly said, citing U.S. cases where high premiums on DAT stocks exposed investors to unnecessary risks.

Wong added that retail investors may lack a full understanding of the risks associated with these companies. "We caution investors to fully understand the underlying risks of DAT," he said, adding that the SFC will step up investor education efforts on the topic.

Local newspaper Wenweipo, citing Wong, reported that Hong Kong currently has no specific regulations governing companies' digital asset treasury arrangements. Wong noted that the SFC will study whether it is necessary to establish guidelines on DATs.

While DATs gain momentum across the global crypto industry, Hong Kong has so far been against the establishment of local DATs. Bloomberg reported last week that the Hong Kong Stock Exchange has challenged plans from at least five companies seeking to make DATs their core businesses, citing rules that prohibit large liquid holdings.

The Block has reached out to the SFC for further comment.