Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Major stock exchanges in Hong Kong and India are reportedly rejecting applications from companies seeking to adopt Bitcoin treasury strategies, signaling a cautious regulatory stance on digital asset integration into traditional finance. This pushback comes amid warnings from experts about the inherent volatility risks and potential for retail investor losses associated with such strategies.
Asian Exchanges Maintain Strict Stance
Hong Kong Exchanges & Clearing has reportedly denied five firms’ applications to implement Bitcoin treasury models in recent months. Similarly, India’s Bombay Stock Exchange (BSE) rejected IT training company Jetking Infotrain’s plan to allocate 60% of its raised funds to Bitcoin.
Australia’s ASX also effectively prevents listed companies from holding over half their assets in cash or cash-like holdings, indirectly ruling out significant digital asset treasury pivots.
Regulatory Fragmentation and Investor Protection Concerns
Joshua Chu, a lawyer and co-chair of the Hong Kong Web3 Association, noted that regulatory fragmentation across Asian jurisdictions persists due to differing policy objectives. Singapore focuses on payments, while Hong Kong emphasizes governance and investor protection within capital markets.
Chu highlighted that India maintains a stricter stance on crypto rebrands, and Australia adopts a cautious, market-conduct-oriented approach. These varied regulatory environments contribute to the challenges faced by companies looking to integrate digital assets.
Warnings Against “Volatility Arbitrage Shells”
The regulatory clampdown follows an estimated $17 billion in losses by retail investors from digital-asset treasury trades, according to a 10X Research report. Experts question the justification for Digital Asset Treasuries (DATs) without strong business cases, rigorous governance, robust custody, and transparent risk controls.
Chu warned that without these safeguards, DATs could become “volatility arbitrage shells disguised as leveraged Bitcoin plays,” echoing the speculative frenzy of the dot-com era. He emphasized the importance of traditional corporate rules governing digital-asset treasuries to protect shareholder interests.
Industry Response and Future Outlook
Siddarth Bharwani, JMD and CFO of Jetking Infotrain, stated that the company’s appeal to India’s Securities Appellate Tribunal seeks clarification rather than confrontation. He views the BSE’s rejection as a missed opportunity for Indian listed companies to innovate responsibly with Bitcoin.
Bharwani pointed out that while countries like Japan and the UAE are developing regulatory frameworks, India, Hong Kong, and Australia need to openly support such innovations. He suggested that the current lack of clarity is driving founders offshore.
The Strategy Inc. Model and Its Risks
Globally, hundreds of companies have adopted the Bitcoin treasury model pioneered by Michael Saylor’s Strategy Inc., which holds over 640,000 BTC. While Citi recently issued a “buy” rating for Strategy, it also cautioned about significant risks, noting the company’s stock acts as a leveraged proxy for Bitcoin, magnifying shareholder losses during price declines.
Despite these warnings, prediction markets indicate a strong expectation that Strategy will continue its Bitcoin acquisition strategy, with only a 7% chance of the firm selling any Bitcoin this year.
