Japan’s main bourse operator, according to a Bloomberg report, is considering a regulatory response to the sharp rise in publicly listed firms transforming into crypto-treasury vehicles amid heavy losses from these entities that are drawing scrutiny.
The Japan Exchange Group Inc. (JPX), which operates the Tokyo Stock Exchange, is now weighing options to rein in this trend.
These include enforcing tighter rules on companies shifting to digital asset holdings and possibly mandating fresh audits for those pivoting to cryptocurrencies.
This internal review comes as part of a broader effort to protect retail investors after several Japan-listed crypto-holding firms experienced steep share declines, wiping out much of the gains they made during a brief surge earlier in the year.
Crypto hoarding sparks regulatory rethink in Tokyo
Since the start of September, at least three companies have reportedly paused plans to buy cryptocurrencies after warnings from JPX.
These firms were allegedly informed that their ability to raise capital could be curtailed if they adopted crypto accumulation as a business model.
The exchange currently has no specific regulations preventing listed companies from holding cryptocurrencies.
However, it is “monitoring companies that raise concerns from a risk and governance perspective, with a view to protecting shareholders and investors,” a JPX representative was quoted as saying in the report.
This indicates that new oversight mechanisms may soon be implemented to prevent sudden shifts in business models without proper investor transparency.
Although JPX already blocks traditional backdoor listings, where private firms gain exchange listings by acquiring public shell companies, it may now apply the same restrictions to listed firms.
These would include companies that suddenly change their core business to crypto holdings without a standard IPO process.
Plunge in crypto stock prices drives caution
The regulatory push follows a wave of volatility in Japan’s digital asset treasury companies, or DATs. Many of these firms were inspired by US-based Strategy Inc., which owns around $66 billion in Bitcoin.
That company’s shares have tumbled nearly 50% since July, setting off alarm bells across global exchanges.
In Japan, the decline has been even more dramatic.
Tokyo-listed Metaplanet Inc., which shifted from running hotels to amassing Bitcoin, has seen its share price fall by over 75% since peaking in mid-June.
Metaplanet now holds more than 30,000 Bitcoin, making it the fourth-largest publicly traded Bitcoin holder in the world.
Other Japanese DATs are also under pressure. Convano Inc., originally a nail salon chain, plans to acquire up to 21,000 Bitcoin but has seen its stock drop roughly 60% since late August.
On Thursday morning in Tokyo, Metaplanet’s shares fell by 8.7%, marking the biggest single-day drop in over three weeks.
Convano and Bitcoin Japan Corp. recorded losses of up to 17% and 12%, respectively.
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