As cryptocurrencies continue to gain viability as an asset class, institutional investors and publicly traded firms are beginning to enter into positions in digital currencies. While generating profits may be the primary purpose, corporations also wish to advertise to their stakeholders that they are keeping up-to-date with latest technological developments, trends, and cutting-edge investment opportunities in enhancing the wealth of the shareholders. The marketing and financial signals with the involvement in blockchain platforms and digital currencies intend to demonstrate the efficiency of corporate operations, and the agility in the utilization of the retained funds. What firms may not be considering however, is the effect these assets may have on their risk profiles. This paper aims at measuring the effect of digital currencies on the risk and returns of publicly traded companies, deciphering the motives behind holding a cryptocurrency as an asset, and determining whether one reason for holding is more impactful than another. Four largest publicly traded holders as well as four of the most prominent digital currencies are explored. The findings from the study contribute to the literature in corporate risk reporting, in marketing and financial motivations of digital currency holdings, and in digital currency risks. The conclusions of the study also make a case for firm transparency through detailed reports of the risk effects of digital currency holdings.

The regulation of digital financial assets has been a topic of discussion for many countries over the last decade. China is among the world leaders in the digitalization and blockchain technologies. Under the “one country, two systems,” two different approaches to the digital financial assets have been implemented in the PRC. Although the COVID-19 pandemic has stimulated many investors to diversify their investment portfolios to include digital financial assets, the People’s Bank of China has not changed its prohibitive position on tokens and cryptocurrencies and even launched a campaign against miners and crypto exchanges. Macau and Taiwan have also prohibited initial coin offerings and the transfer of cryptocurrencies due to the risks of money laundering connected with the citizens of mainland China. Macau, Taiwan, and the Monetary Authority of Hong Kong have implemented less stringent regulations of digital financial assets. Comparative analysis demonstrates that Hong Kong acts as an intermediary for China to the digital financial assets.