The Japan Exchange Group Inc. (JPX), operator of the Tokyo Stock Exchange, is internally reviewing options to impose tighter regulations on publicly listed companies that are pivoting their business models to hold significant cryptocurrency treasuries. This move comes in response to steep share price declines experienced by several such firms, which have wiped out gains from earlier surges and raised concerns about investor protection.
According to a Bloomberg report, JPX is weighing measures that could include enforcing stricter rules on companies shifting to digital asset holdings and potentially mandating fresh audits for those making the transition. The exchange currently has no specific regulations barring listed firms from holding crypto but is actively monitoring companies from a risk and governance perspective to protect shareholders.
The review is part of a broader effort to safeguard retail investors. Since September, at least three companies have reportedly paused plans to buy cryptocurrencies after warnings from JPX that their ability to raise capital could be curtailed if they adopted crypto accumulation as a core business model. JPX may apply restrictions similar to those blocking traditional backdoor listings to firms that suddenly change their core business to crypto holdings without a standard IPO process.
The regulatory push follows significant volatility among Japan's so-called digital asset treasury companies (DATs). Many were inspired by U.S.-based MicroStrategy Inc., which holds around $66 billion in Bitcoin but has seen its shares tumble nearly 50% since July. In Japan, the declines have been more severe. Metaplanet Inc., which shifted from hotels to amassing Bitcoin, has seen its share price fall over 75% since peaking in mid-June. The company now holds more than 30,000 BTC, making it the world's fourth-largest publicly traded Bitcoin holder.
Other Japanese DATs are also under pressure. Convano Inc., originally a nail salon chain planning to acquire up to 21,000 Bitcoin, has seen its stock drop roughly 60% since late August. On a recent Thursday, Metaplanet's shares fell 8.7%, Convano lost up to 17%, and Bitcoin Japan Corp. dropped up to 12%.
