Hong Kong SFC to Draft Guidelines for Listed Companies Investing in Cryptocurrencies

The Event in Detail

The Hong Kong Securities and Futures Commission (SFC), under Chairman Wong Tin-yau, has announced intentions to provide comprehensive guidance for Digital Asset Treasuries (DATs) and address the practice of listed companies purchasing Bitcoin. This move signals a proactive approach by Hong Kong's financial regulators to formalize the involvement of publicly listed entities in the burgeoning cryptocurrency market. Currently, specific regulations governing listed companies' investments in cryptocurrencies are absent.

Simultaneously, the Hong Kong Stock Exchange (HKEX) has intensified its scrutiny of companies attempting to transition into core crypto treasury models. The HKEX has challenged the plans of at least five firms seeking to pivot their primary business to digital asset accumulation, citing existing listing rules that prohibit excessive holdings of liquid assets. The exchange maintains that all listing applicants and listed companies must operate "viable and sustainable" businesses, effectively prohibiting a full transformation into entities that purely hoard cryptocurrencies.

Regulatory Landscape and Strategic Implications

The SFC's initiative reflects Hong Kong's ongoing commitment to adapting its regulatory framework to the evolving digital asset landscape. While the SFC monitors market developments and studies the implications of such investments, it also aims to address the current regulatory gap.

This regulatory development unfolds within a broader context of global corporate adoption of digital assets. As of October 2025, over 228 public companies worldwide have reportedly announced digital asset treasury strategies, collectively holding approximately $148 billion in Bitcoin and other cryptocurrencies. Companies often pursue these strategies to enhance transaction efficiency, mitigate currency risk, provide new liquidity sources, attract tech-savvy investors, capitalize on financial returns, or establish technological leadership.

However, the path to integrating digital assets into corporate treasuries is not uniform. The experience of KindlyMD, whose stock closed down 12% following its Bitcoin treasury announcement, contrasts with the perceived success of companies like MicroStrategy. This divergence highlights that investor perception is significantly influenced by a company's prior business model and the strategic rationale behind its pivot to digital asset holdings. For KindlyMD, its former identity as a healthcare data provider led investors to view the Bitcoin treasury move as a high-risk gamble rather than a strategic financial decision.

Market Implications and Investor Sentiment

The SFC's move to provide guidance is poised to impact how listed companies in Hong Kong approach cryptocurrency investments. By clarifying regulatory expectations, the SFC aims to foster a more structured and secure environment for digital asset integration into corporate finance.

Chairman Wong Tin-yau has emphasized the critical need for investors to understand the intrinsic value of DATs. He also cautioned that premiums associated with such investments could diminish rapidly. This warning aligns with reports, such as one from Singapore-based 10X Research, indicating that retail investors have incurred an estimated $17 billion in losses from participating in DAT trades. The SFC's position underscores a dual objective: facilitating responsible innovation while safeguarding investor interests against speculative bubbles and misleading valuations.

Further demonstrating its measured approach, Hong Kong has also been active in licensing cryptocurrency trading platforms. The SFC issued its first operational licenses for such platforms in 2025 to PantherTrade and YAX, bringing the total to seven since mid-2024. Currently, only Bitcoin (BTC), Ether (ETH), Avalanche (AVAX), and Chainlink (LINK) are legally permitted for trading in Hong Kong. While Hong Kong aims to solidify its position as a crypto hub, these regulatory actions reflect a deliberate strategy to balance market development with robust oversight.