Chinese crypto founders shelve US$500 million ether digital asset treasury project
News Summary
Several prominent Chinese cryptocurrency figures have called off a planned US$500 million Ether Digital Asset Treasury (DAT) project due to the ongoing slump in the broader crypto market. The project was initiated by Huobi founder Leon Li Lin, HashKey Group chairman and CEO Xiao Feng, Meitu co-founder Mike Cai Wensheng, and Fenbushi Capital founder Bo Shen, with the goal of investing in Ether, the world's second-largest cryptocurrency. Despite having secured US$110 million in capital commitments, worsening market conditions forced the proponents to shelve the initiative. Digital Asset Treasury companies are publicly listed firms that aim to boost their value by holding substantial amounts of cryptocurrencies, with Nasdaq-listed Strategy (formerly MicroStrategy), holding nearly 650,000 Bitcoin, being a prime example. While DATs have gained popularity in the US over the past year amid rising crypto prices, this type of company has not been fully embraced by regulators in Hong Kong.
Background
Digital Asset Treasury (DAT) companies are publicly listed firms that seek to boost their value by holding large amounts of cryptocurrencies. A well-known example is Nasdaq-listed Strategy (formerly MicroStrategy), which holds nearly 650,000 Bitcoin. Over the past year (2024-2025), DAT companies have grown popular in the US amid rising crypto prices. However, regulatory bodies in Hong Kong have been more cautious and have not fully embraced this type of company. The shelving of this project occurs against a backdrop of a broader and persistent slump in the cryptocurrency market.
In-Depth AI Insights
Is the shelving of this project solely due to worsening market conditions, or are there deeper structural reasons at play? - On the surface, the market slump is the direct cause, reflecting the harsh reality of the current crypto bear market, especially in 2025. However, the project's initiation by Chinese crypto heavyweights and its failure to fully gain regulatory embrace in Hong Kong might point to deeper structural challenges. - Hong Kong, as an offshore crypto hub, still has an evolving regulatory environment. Compared to the US, Hong Kong's receptiveness to publicly listed companies directly holding large crypto assets appears lower. This could have added uncertainty to the project's future operations, making it more susceptible to being shelved during a market downturn. - Furthermore, China's strict stance on cryptocurrencies, even for founders seeking to operate offshore, could introduce underlying reputational or operational risks, making the project inherently more fragile when facing market headwinds. What does the project's shelving imply for Hong Kong's ambitions as a global crypto hub and its digital asset regulatory trajectory? - This shelving highlights Hong Kong's challenges in balancing financial innovation with risk control. While Hong Kong is actively trying to attract crypto businesses, it remains cautious about models that could introduce systemic risk or money laundering concerns, such as large-scale digital asset treasury firms. - This likely means Hong Kong will continue to prioritize regulated, institution-centric crypto services (like Virtual Asset Service Provider licenses) rather than fully opening up to all forms of crypto asset holding and investment models. - Investors should be aware that Hong Kong's regulatory framework might be more conservative than the US, potentially posing a persistent hurdle for crypto projects aiming to replicate the MicroStrategy model there. Given US President Trump's pragmatic approach to digital asset regulation, are Chinese crypto investors and projects more likely to seek opportunities in the US going forward? - Under President Trump's second term, the US regulatory environment for digital assets is expected to remain pragmatic and open, particularly with an emphasis on technological innovation and capital inflow. This contrasts with Hong Kong's potentially more cautious stance. - The US market already has established precedents for digital asset treasury companies (e.g., MicroStrategy) and offers deeper capital markets and a more developed (though still evolving) legal framework, which could be more attractive to Chinese crypto founders seeking large-scale digital asset investments. - As mainland China continues its restrictions on crypto activities and Hong Kong maintains a relatively conservative regulatory approach, Chinese crypto powerhouses with significant capital and a global outlook may find greater operational latitude and regulatory certainty in the US to pursue their digital asset strategies.