Stock exchanges in India, Hong Kong, and Australia have reportedly begun blocking or restricting companies from becoming digital asset treasury vehicles (DATs).
Hong Kong Exchanges & Clearing Ltd. has rejected at least five companies seeking to become DATs, citing rules against "cash companies" that hold primarily liquid assets, according to a Bloomberg report on Wednesday, citing anonymous sources.
The Bombay Stock Exchange rejected a listing application last month from a company after it announced plans 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-listed firms that pivot to investing in crypto are encouraged to consider structuring their offering as an exchange-traded fund, said a spokesperson.
Japan Remains an Outlier
Japanese stock exchanges remain open to the concept of DATs. Japan allows these vehicles with proper disclosure and hosts the most in Asia, including 14 listed Bitcoin (BTC) buyers, among them the world’s fourth largest Bitcoin DAT, Metaplanet.
However, MSCI, one of the world’s largest index providers, is proposing to exclude large DATs with more than 50% crypto holdings from its indexes, a move that could significantly impact passive investment flows.
Concerns Over Company Status and Operations
Some bourses have expressed concern that these companies are effectively selling their "listed status" rather than operating legitimate businesses, as reported by Bloomberg.
The issue of "cash companies" holding mostly liquid assets also raises concerns, as such entities can resemble empty shell companies that could potentially be used for improper purposes.
Regulators are also keen for listed companies to possess genuine operational activities, rather than solely functioning as investment vehicles holding assets.
Crypto Treasury Model Faces Challenges
Digital asset treasury vehicles have arguably been a significant driver of crypto markets this year. However, many are now experiencing difficulties, trading at or below their net asset values (NAVs) as the markets have undergone substantial corrections.
Researchers at 10x Research have stated that the "age of financial magic is ending for Bitcoin treasury companies," pointing to slumping share prices, particularly at Metaplanet.
Even Tom Lee, chair of BitMine, hinted earlier this month that the DAT bubble may have burst.