Despite its warm welcome to emerging and innovative firms such as pre-profit biotech companies, the Hong Kong Stock Exchange (HKEX) seems to be having second thoughts cryptocurrency and related businesses.

The bourse is said to be hesitant to approve the initial public offering (IPO) applications of Chinese crypto mining equipment maker Bitmain, which was filed in September.

The mining startup plans to raise US$3 billion.

IPO lawyers say it is reasonable to question why the stock exchange, which emphasizes on suitability and sustainability of the business is approving listings, may have a reluctant attitude towards listing these mining firms.

“Coupled with the potential market speculation which has been reflected over the price of bitcoin recently, it is even more difficult to present a sustainable business model of this industry,” says Mr Frank Bi, a partner at international law firm Ashurst in Hong Kong.

“The HKEX will be particularly cautious and concerned over the regulatory uncertainty arising from bitcoin miner IPOs in Hong Kong,” he notes.

Besides Bitmain, the Chinese manufacturer of cryptocurrency mining hardware Canaan Creative and bitcoin mining chip maker Ebang also filed for IPOs with the HKEX in May and June, respectively.

So far, none of these listing applicants has proceeded to the next stage – a listing hearing. If this does not happen within six months from filing, the application lapses.

This means Canaan Creative’s application is no longer active, while Bitmain and Ebang are facing a tight deadline. However, things do not look bright for the two applicants.

This year, Bitcoin, a touchpoint of reference for the sector, saw its total market value plunge by 73.6 percent, from over US$255 billion in January to around US$67.3 billion on December 26.

Bitmain also says this week that it is undergoing some adjustment to its staff this year. The startup is said to be laying off over half of its employees.

Founded in 2013, Bitmain became a unicorn with over US$1 billion in value thanks to the surging prices of Bitcoin, whose value is highly volatile.

The mining startup’s net income during the first six months of this year soared almost nine-fold to US$742.7 million from a year earlier.

And the regulators…

The HKEX’s hesitation to approve IPOs filed by crypto-related firms is not an isolated case. Hong Kong regulators’ attitude towards cryptocurrency has been cautious.

While the regulators do not intend to impose a complete ban on it, they are coming up with a framework to regulate businesses that are associated with the digital coins.

The Securities and Futures Commission (SFC) is proposing regulation targeting virtual asset portfolio managers and distributors, as well as the trading platforms of cryptocurrency. The SFC will impose licensing conditions on the former and a “sandbox” on the crypto exchanges. Its chief executive Mr Ashley Alder said earlier that only professional investors will be allowed to participate for the time being.

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