Asia’s stock exchanges are pushing back against crypto treasuries: Report
News Summary
Stock exchanges in India, Hong Kong, and Australia are reportedly blocking or restricting companies from becoming digital asset treasury (DAT) vehicles. Hong Kong Exchanges & Clearing Ltd. has rejected at least five companies seeking DAT status, citing rules against "cash companies" that primarily hold liquid assets. The Bombay Stock Exchange also rejected a listing application from a company planning to invest proceeds in crypto. Meanwhile, Australia's ASX bars companies from holding more than half of their balance sheets in cash-like assets such as crypto, making DAT models "essentially impossible." ASX advises firms pivoting to crypto investment to consider structuring their offerings as exchange-traded funds (ETFs). Japan stands out, as its stock exchanges remain open to DATs, hosting the most in Asia, including 14 listed Bitcoin buyers. However, MSCI, a major index provider, is proposing to exclude large DATs with over 50% crypto holdings from its indexes, potentially cutting off passive investment flows. Concerns raised by exchanges include companies potentially "selling their listed status" rather than running legitimate operations, and the risk of "cash companies" being used for improper purposes, as regulators seek listed entities with real business operations.
Background
The Digital Asset Treasury (DAT) model involves publicly listed companies converting a portion or the majority of their corporate treasury assets into cryptocurrencies, such as Bitcoin. This model gained significant attention during cryptocurrency bull markets, with some companies leveraging their listed status to attract investors and serve as vehicles for crypto investment. However, as the cryptocurrency market has undergone significant corrections during the current period (2025), many DAT companies have seen their share prices fall to or below their Net Asset Values (NAVs), leading to questions about their performance. This has prompted concerns from traditional financial market regulators regarding the DAT model, particularly concerning the legitimacy of corporate operations, the risks associated with "cash companies," and the potential for misuse for improper purposes.
In-Depth AI Insights
What are the true underlying drivers behind Asian stock exchanges' resistance to DATs? - While ostensibly driven by concerns over "cash companies" and "selling listed status," the deeper reasons likely stem from traditional financial institutions' long-term risk assessment of crypto assets' inherent volatility and regulatory uncertainty. - This stance also reflects a prevalent conservative regulatory philosophy across several Asian jurisdictions (excluding Japan), prioritizing retail investor protection and market stability over the potential risks of rapid innovation. - Furthermore, traditional financial institutions may be concerned that DATs blur the lines between operating public companies and investment vehicles, potentially circumventing stricter asset management or fund regulations. What are the long-term implications of MSCI's proposed exclusion of large DATs from its indexes and institutional capital flows? - MSCI's decisions, as a leading global index provider, carry immense weight for global institutional investor capital allocation. The exclusion of DATs would significantly reduce passive investment flows into these companies, undermining a key pillar of their attractiveness. - This could compel institutional investors seeking crypto exposure to shift towards more traditional, regulated avenues, such as spot ETFs (where permitted) or direct investments, rather than through publicly traded equity. - In the long run, this will further differentiate "true" operating companies from "crypto investment vehicles," prompting stricter scrutiny of business substance for listed companies and potentially posing a significant challenge to the viability of the DAT model. How might this regulatory divergence in Asia influence global crypto market development and capital allocation? - The regulatory divergence within Asia (Japan versus India/Hong Kong/Australia) and between Asia and other regions (e.g., North America) will likely lead to fragmented global cryptocurrency market development. - Japan could emerge as a "safe haven" for companies looking to leverage public listing structures for crypto investments, attracting capital restricted in other Asian markets. - This divergence will complicate cross-border investments and potentially encourage regulatory arbitrage. Investors will have to carefully evaluate different jurisdictional regulatory environments to optimize their crypto investment strategies, potentially leading to capital flows toward more lenient or clearer regulatory markets.