Hong Kong Securities and Futures Commission is Strengthening Supervision of Listed Companies' Digital Asset Allocation

According to the South China Morning Post, the Hong Kong Securities and Futures Commission has halted at least five listed companies' plans to shift to digital asset fund management models, mainly due to concerns that these companies' stock prices have far exceeded the actual cost of their digital assets, forming a clear valuation bubble.

SFC Chairman Anthony Wong issued a risk warning, noting that regulatory authorities have observed that the market capitalization of some digital asset (DAT) listed companies is more than twice the cost of their digital assets, a phenomenon similar to what has appeared in the U.S. market.

The factual data is even more alarming. A report by 10X Research confirms that retail investors chase the price of these digital asset concept stocks at high prices to gain Bitcoin exposure, ultimately suffering approximately $17 billion in actual losses.

Against this backdrop, major digital asset companies in Hong Kong, such as Boyaa Interactive and Ourgame International, have recently experienced continued weak stock performance, and volatility in the cryptocurrency market has further increased the pressure on these companies' stock prices.

To address these challenges, regulators have taken action against companies attempting to repackage traditional enterprises into cryptocurrency investment entities without clear operational substance, citing restrictions in listing rules that limit these companies from holding excessive liquid assets on their balance sheets.

It is noteworthy that the tightening of policies by Hong Kong regulators is not an isolated case. The Australian Securities Exchange (ASX) prohibits listed companies from holding more than 50% of cash or cash equivalents, making it difficult to implement pure cryptocurrency fund management models domestically.

Meanwhile, the Bombay Stock Exchange in India recently rejected Jetking Infotrain's listing application, citing the company's plan to raise funds for investment in cryptocurrencies.

In summary, in response to the current market situation, #Hong Kong Securities and Futures Commission# has adopted a two-pronged strategy. First, by vigorously strengthening investor education to improve retail investors' understanding of the operation mechanisms and risk characteristics of digital asset trading platforms, thereby enhancing market self-protection capabilities;

Second, regulatory authorities have initiated special review procedures to assess the necessity of developing specific guidelines for digital asset trading, aiming to fill the current regulatory vacuum on listed companies' investments in cryptocurrencies and to build a sound institutional framework for healthy market development.