A hard time is approaching for crypto-hoarding companies in Japan. The financial service company Japan Exchange Group (JPX) now has its eyes on crypto-hoarding companies. Yes, the exchange operator is keenly observing publicly listed digital asset treasury companies that collect and hold large amounts of coins for a long time, without selling them.
Lawrence Samantha, CEO of NOBI, a crypto investment platform, told AltCoin Desk that Japan is becoming more cautious about firms holding large amounts of cryptocurrencies. This happens mainly because the authorities want to ensure how companies report financial statements and conduct clear and transparent business practices.
“While corporate interest in crypto continues to grow, moves to limit on-balance-sheet holdings seem tied to concerns about accounting treatment, disclosure standards, and overall transparency.”
Japan’s move to curb crypto hoarding firms
Crypto hoarding has put small investors at a loss, and this adds to one of the significant reasons for Japan’s main stock exchange, JPX’s attempt to tighten rules. This also prevents companies from going public just to hold large amounts of crypto assets. The stock exchange operator will also conduct new audits and limit such companies’ ability to raise funds if their core business idea is to hoard cryptocurrencies.
Why crypto hoarding raises concerns
“When a small number of entities or individuals hold too much supply, the market experiences less liquidity. Price swings can become sharper when these large holders move their assets”, added Lawrence Samantha. While long-term holding is generally good, excessive concentration of assets in a few hands can be risky for the whole system.
Additionally, there are even firms that hold huge amounts of crypto and hesitate to disclose custody arrangements, liquidity plans, security measures, and other procedures. As traditional treasuries argue, several companies may hold millions of crypto before they go public, only to manipulate or inflate valuations.
But crypto hoarding also carries positive sides
Holding crypto for the long term can also diversify a company’s balance sheet. Besides bonds, cash, and other traditional assets, they can also add cryptocurrencies. Although crypto is volatile, companies that have invested in a coin, for instance, Bitcoin long back, can now earn profits, as its price has exponentially risen. In simpler terms, early holders can win the race fast.
For the NOBI executive, several companies believe that holding Bitcoin or other assets for a long term is a hedge against inflation or as a long-term store of value.
These holders do not rush to sell their assets during market dips and hikes, making the price stable. “Hoarding can also signal market maturity: people are no longer trading purely for speculation, but for long-term asset appreciation.”
While crypto hoarding has its advantages, the Japan Exchange Group is currently looking to curb the negative aspects of companies engaging in it. The core aim is not to discourage innovation, but to make sure that publicly listed companies carry genuine and regulated business models instead of speculative strategies.
