Asian stock exchanges are blocking "Coin Hoarding companies": The Hong Kong Stock Exchange and other regions oppose digital asset financial strategies, hindering the rise of encryption assets.

As the crypto market experiences a recent pullback, the three major securities exchanges in the Asia-Pacific region—inclusive of the Hong Kong Stock Exchange and Clearing Limited (HKEX)—are joining forces to resist the accumulation tools of cryptocurrencies disguised as publicly listed companies (Digital Asset Treasury, DAT). HKEX has challenged the plans of at least five companies seeking to make digital asset financial strategies their core business, citing regulations that prohibit holding large amounts of liquid assets. This regulatory resistance poses a threat to the rising trend of digital assets that has been popular for most of this year, especially after Bitcoin's price has retreated from a record high of $126,251 on October 6.

Asia-Pacific Regulatory Tightening: Preventing Listed Companies from “Transforming” into Coin Holding Funds

Digital Asset Financing (DAT) model is gaining popularity worldwide, but it is facing strict scrutiny from regulators in the Asia-Pacific region.

· The challenge of HKEX: HKEX has challenged the plans of at least five companies to transform their digital asset financial strategies into core businesses by citing its rules prohibiting large liquidity holdings. According to exchange rules, if a listed company's assets primarily consist of cash or short-term investments, it may be regarded as a “cash company” and face stock suspension.

· Opposition from India and Australia: The Bombay Stock Exchange (BSE) rejected Jetking Infotrain's application for a share allotment last month, citing that the company plans to invest part of its proceeds in Crypto Assets. The Australian Securities Exchange (ASX) prohibits listed companies from having 50% or more of their balance sheet assets in cash or cash-like assets, making it “virtually impossible” to adopt a Crypto Assets model in Australia.

· Core Purpose: The exchange's move aims to prevent shell companies from cashing out using their listing status and to ensure that the listed company's operations are viable, sustainable, and substantial. Legal experts point out that companies need to demonstrate that acquiring digital assets is “part of their operational business” in order to gain approval.

Market Pullback and Institutional Sentiment: The Halo of DAT Stocks Fades Away

The success of Strategy Inc., an advocate of the DAT model led by Michael Saylor, has spawned hundreds of imitators globally, but the recent market pullback has caused the stock halo of these coin hoarding companies to fade.

· Stock price decline and retail investor losses: As the crypto market experienced a sharp sell-off, the purchasing speed of DAT Company slowed down, and its stock price began to fall. A report from Singapore's 10X Research indicated that retail investors are estimated to have lost $17 billion due to investments in DAT trading.

· Japan is an exceptional case: Japan is a significant exception in the Asia-Pacific region. Due to its listing rules allowing coin-hoarding companies relatively free activity space, Japan currently has the most Bitcoin buyer listed companies in Asia, with 14. Among them, hotel operator Metaplanet Inc. experienced a surge in stock price since announcing its transformation at the beginning of 2024, but has recently fallen by more than 70%.

· Concerns from index providers: Major global index providers such as MSCI Inc. have also begun to intervene. MSCI recently proposed to exclude companies with cryptocurrency holdings of 50% or more of total assets from its global indices, as DAT “may exhibit characteristics similar to investment funds.” If implemented, this would lead to a passive outflow of funds, thereby weakening the premium of DAT stocks.

Volatility of Traditional Safe-Haven Assets: Gold and Silver Experience Largest Decline in Years

While the crypto assets market is fluctuating, traditional safe-haven assets such as gold and silver have also experienced significant volatility and have recovered from their steepest declines in years.

· Precious Metals Sell-off: Gold prices fell 5.3% on Tuesday (original publication date), marking the largest drop in five years. Silver rebounded slightly after a 7.1% drop in the previous trading day.

· Position Cleansing: Charu Chanana, Chief Investment Strategist at Saxo Markets, believes that this sell-off in precious metals “is more like position cleansing than a macro shock.” This is mainly attributed to previous technical indicators showing an overbought upward trend, as well as the U.S. government shutdown preventing agencies like the CFTC from releasing important position reports.

· Long-term drivers remain: Analysts at ANZ Group Holdings Ltd. point out that despite the pullback, long-term drivers such as central bank purchases and concerns over the fiscal dilemmas in developed countries are still supporting precious metal prices.

Conclusion

The blockade by major exchanges in the Asia-Pacific region against the “digital asset finance” model marks an escalation of regulatory friction in the integration process of crypto assets and the traditional financial market. As institutions like HKEX take a tough stance, the expansion of coin hoarding companies in Asia will face significant challenges. At the same time, the substantial fluctuations of traditional safe-haven assets like gold and silver remind investors that, in the current environment of high macroeconomic uncertainty, rapid shifts in market sentiment and position settlements may occur at any time. The future trend of crypto assets will continue to be influenced by both the macro environment and regulatory policies.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The crypto assets market is highly volatile, and investors should make decisions with caution.