Hong Kong Clamps Down on Crypto Treasury Hype: SFC's Bold Warning to Investors

Hong Kong's Securities and Futures Commission (SFC) has issued a stern alert to retail investors on the perils of Digital Asset Treasury (DAT) companies, which hold cryptocurrencies as core assets, while the Hong Kong Stock Exchange has blocked at least five listed firms from pivoting to such models. SFC Chairman Kelvin Wong Tin-yau highlighted concerns over DAT stocks trading at hefty premiums to their underlying crypto holdings, drawing parallels to U.S. cases where valuations doubled the asset costs, exposing investors to undue risks. Current listing rules bar excessive liquid assets like crypto on balance sheets without operational justification, prompting the SFC to review potential new guidelines amid no existing regulations for crypto investments by listed entities.

theblock.co

This crackdown follows a 10X Research report estimating $17 billion in retail losses from overpaying for DAT stocks at premiums to net asset value, fueled by inflated valuations detached from crypto holdings, high volatility, liquidity issues, and firms lacking substantive operations beyond crypto storage. Local players like Boyaa Interactive and Ourgame International have suffered share price slumps amid crypto market swings, amplifying investor protection worries and aligning with Beijing's September 2025 directive to halt Chinese institutions' crypto operations in Hong Kong over systemic risks.

businessinsider.com

In contrast to the U.S., where firms like MicroStrategy (holding over 640,000 BTC worth ~$70 billion) proliferate DAT strategies despite valuation bubbles, Asian regulators, including Hong Kong, are resisting efforts to curb "volatility arbitrage shells." Wong urged investors to grasp DAT risks—lacking robust governance, custody, and risk management—before engaging, as the SFC ramps up education and eyes formal rules to balance innovation with safeguards, potentially vanishing premiums under regulation.