Japan Tightens the Screws on Crypto Treasury Firms Amid Spiraling Losses

Crypto's Wild West era may be ending—at least in Japan. Regulators are cracking down on digital asset treasury companies as red ink floods balance sheets.

Here's the kicker: Tokyo won't let crypto firms play fast and loose with investor funds anymore. The Financial Services Agency (FSA) is drafting stricter capital requirements and audit protocols—because apparently, 'trust us, we're crypto natives' doesn't cut it when billions vanish.

Behind the scenes: Multiple treasury platforms got caught with overleveraged positions during last year's market crash. Now they're begging for bailouts while regulators sharpen their knives. Classic finance meets decentralized chaos.

The irony? Traditional banks are licking their wounds too—just with better accounting and fewer memecoins on their books.

Crypto treasury stocks face sharp declines

The type of crypto-holding stocks that follow the model created by Michael Saylor’s Strategy Inc. saw big gains earlier this year but have since dropped dramatically, leaving everyday investors facing major losses. Strategy, which has built up a Bitcoin collection valued at roughly $66 billion, has seen its stock price fall by about half since mid-July.

Meanwhile, stock exchanges in Hong Kong and other parts of the Asia-Pacific area have pushed back against efforts to create new digital asset treasury companies, or DATs. Japan stands apart with 14 listed Bitcoin-buying firms, more than any other Asian country, based on information from BitcoinTreasuries.net.

What backdoor listings mean for crypto firms

A backdoor listing happens when a private company becomes publicly traded through a merger or takeover, skipping the traditional Initial Public Offering route. Japan Exchange Group already doesn’t allow backdoor listings, and sources say it’s now looking at whether to extend that ban to companies already on the exchange that change their main business focus to collecting cryptocurrency.

The push for tougher oversight came about because of concerns that Japanese investors have lost money from the recent drop in local digital asset treasury company stocks, sources said.

Metaplanet Inc., which is by far Japan’s biggest digital asset treasury operator trading in Tokyo, has watched its stock price crash more than 75% from its peak in mid-June. This came after the stock had jumped about 420% earlier in the year. The company has gathered more than 30,000 Bitcoins after switching its business from running hotels to cryptocurrency in early 2024, making it the fourth-biggest public Bitcoin holder in the world.

Convano Inc., a nail salon business that plans to buy 21,000 Bitcoins, has seen its shares fall roughly 60% since late August.

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