Feel strongly about these letters, or any other aspects of the news? Share your views by emailing us your Letter to the Editor at [email protected] or filling in this Google form. Submissions should not exceed 400 words.When the Hong Kong Monetary Authority licensed the city’s first two stablecoin issuers in April, HSBC and Anchorpoint Financial, it capped one of the fastest regulatory build-outs this market has seen. The first licensed Hong Kong dollar stablecoin made its first live transfer this month.In barely a year, the Securities and Futures Commission published its ASPIRe road map for growing Hong Kong’s virtual asset market, consulted on new regimes for dealers and custodians, and allowed platforms to offer more products and liquidity. Hong Kong Exchanges and Clearing has set out what listed companies must disclose about digital-asset activity. The architecture is nearly built.Something is missing one layer down, where no circular reaches: the audit committee. A growing number of listed companies hold digital assets, take them in payment, or partner with a licensee. For them the question is no longer what to disclose – HKEX has answered that – but how the board knows that what it discloses is true.Take custody. A company can accurately state that its assets sit in “institutional cold storage” and the claim can still be worth little. Custodian failure – theft, insolvency, commingling of funds – has produced this market’s most catastrophic losses, from Mt. Gox to FTX; and unlike price risk, it is largely controllable. Disclosing an arrangement is not assurance that the assets exist and are segregated; that takes an independent attestation – a controls report, or a proof-of-reserves exercise with an auditor attached.Valuation is subtler. Under the international interpretation Hong Kong follows, a holding of cryptocurrency is neither cash nor a financial asset: depending on why it is held, it can be inventory or an intangible, and stablecoins may be different again. Two companies holding identical positions can report them at cost, at the lower of cost and net realisable value, or at fair value – each defensibly.