Here’s Why Hong Kong Stock Market Regulators are Still Skeptical About Bitmain’s IPO

The long-awaited and controversial Bitmain IPO has still not been given the go-ahead signal by the Hong Kong stock market regulators mostly due to the almost non-existent regulatory framework around the crypto ecosystem.

Cryptocurrency businesses, such as Bitmain, are still ‘premature’ to enter the markets in the lack of proper regulation surrounding such businesses. Hence, it is questionable that the IPO would get a green light from the regulatory authorities of the Hong Kong Stock Exchange (HKEX).

When we see that the Hong Kong regulator and stock market operator are both against the idea of a cryptocurrency related business entering the HKEX, their advice to the exchange’s listing committee, which is the final authority on this, could prove to be decisive. Apparently, a closed-door hearing has taken place.

Before the listing committee, where the final decision to list or reject an IPO is taken by the committee. Nevertheless, if the committee doesn’t support it in six months, the application lapses. Bitmain has filed an application looking forward to raising up to $3 Billion USD in an Initial Public Offering (IPO), which will lapse on the 26th of March, 2019.

A dismissal for Bitman’s fundraising would be an extra setback to the upcoming industry that now finds itself amidst an escalating number of regulatory hurdles, as central banks and other financial regulators worldwide seek to exert control over the disruptive technological phenomenon.

Founded in 2013, Bitmain is the largest assembler of the data-hungry computers used for mining cryptocurrencies, and operator of mining collectives. Its bursting growth from start-up to unicorn – a company exceeding US$1 billion in value – traced the 15-fold surge in bitcoin’s value in 2017, which created a demand boom for Bitmain’s Antminer computers.

The leading bitcoin mining hardware manufacturer must convince both HKEX and SFC, whose twin approval is the only ticket to the hearing stage. But if one of the two fails to sign on the dotted line, then the application is as good as dead. Legal experts have weighed in the matter, noting that there have been cases when question marks about sustainability have seen IPO applications fail.

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