Chinese online fashion and lifestyle platform MOGU Inc. saw its shares surge sharply on Thursday, after it decided to take a crypto pivot. The company’s board announced that it would allocate up to $20 million of its corporate assets to digital currencies. The assets include Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) or related securities and investment products, it said in a press release.
Stock surged ~80% intraday
The board believes that integrating digital assets into its core assets will help diversify treasury holdings and also support operational capabilities essential for “next-generation AI products and services.” Chairman Chen Qi is authorized to decide the exact timing and size of purchases. On the announcement day, MOGU’s stock jumped dramatically, at one point up ~80% intraday.
China’s regulatory stance toward crypto has been restrictive for many years with the country making moves like banning crypto trading platforms, crackdowns on mining, tight controls on financial institutions and cross-border flows.
China’s crypto regulation
Now, with a company in China making a public announcement of investing corporate treasury assets into crypto, it is quite risky, and perhaps signals either changing risk perceptions or new structuring to comply with regulation like using overseas listings, or investing via jurisdictions or products considered legal or semi-legal.
MOGU is listed on the NYSE, which may give it more leeway or access to international capital markets and crypto products. However, investing crypto could still run up against regulatory risk at home, including possible scrutiny from Chinese authorities concerned about foreign exchange, capital outflows, or crypto liquidity.
Mogu is a KOL-driven (Key Opinion Leader) fashion and lifestyle e-commerce platform in China. Originally founded in 2011 in Hangzhou, the company went public in December 2018. Its model is heavily reliant on influencers and live streaming, fashion content, connecting merchants, KOLs, and consumers.