Tokyo Exchange Operator Mulls Limits on Digital Asset Treasury Firms: Report

The heat is rising on digital asset treasuries in the Far East.

Japan Exchange Group (JPX), which operates the Tokyo Stock Exchange, is considering measures to curb the growth of listed companies that hoard digital tokens as treasury assets, Bloomberg reported, citing people familiar with the matter.

The bourse is weighing stricter enforcement of backdoor listing rules and fresh audits for firms tilting to crypto in a bid to protect investors, according to the report. Since September, it has pushed back against three companies planning to to down that route, warning of fundraising restrictions if they do, Bloomberg said.

Japan leads Asia with 14 publicly listed bitcoin BTC$69,114.06-holding companies, including Metaplanet (3350), which boasts a stash of over 30,000 BTC. Shares in the Tokyo-based company fell 6.59% on Thursday after the report was published.

"We understand that regulatory discussions are progressing in various jurisdictions with the aim of ensuring investor protection and maintaining market integrity ...," Metaplanet said in a statement on its website. "We believe this is a natural and healthy development that will contribute to enhancing the transparency and credibility of this emerging business model."

Other bitcoin treasury companies also fell. Anap Holdings (3198), which holds 1,111 BTC lost 6.5% and Convaco (6574), with 665 BTC, tumbled 11.5%. NEXON (3659), an online-gaming firm with 1,717 BTC, stood out with a drop of just 0.22%.

The exchange is closely monitoring such firms from a governance and shareholder protection perspective, even though it doesn't have specific regulations banning crypto hoarding by listed firms, Bloomberg said.

JPX's caution toward digital asset treasuries stems from the volatile boom-and-bust swings in these stocks, which have inflicted significant losses on retail investors. Metaplanet shares have crashed over 70% from their June peak.

The firm emphasized that its transition into a bitcoin-focused company was conducted “in a lawful and transparent manner” with input from legal, accounting and tax professionals.

“With shareholder approval at both extraordinary and annual general meetings, we have adhered to all procedures deemed necessary under applicable laws and regulations, maintaining corporate governance as our highest priority,” the company wrote.

Metaplanet’s quarterly earnings report, also released Thursday, show how central bitcoin has become to its operations. Net income rose to 13.52 billion yen ($87.35 million) from a year-earlier loss, while its bitcoin treasury rose to 30,823 BTC.

The company also highlighted efforts to build a more durable capital structure, such as a planned issuance of perpetual preferred shares and a new credit facility backed by its bitcoin holdings, to support its long-term strategy of accumulating bitcoin while managing shareholder dilution.

Metaplanet reached an absolute bitcoin gain of 4,412 BTC during the quarter, and a BTC Yield of 33%.

UPDATE (Nov. 13, 12:38 UTC): Adds response from Metaplanet in fifth paragraph, share-price reactions of digital asset treasury companies in sixth, Metplanet earnings in last three paragraph.