Original Article Title: "Caught in a Public Relations Storm, What Happened to HashKey?"

Original Article Author: Joe Zhou, Foresight News

The native token of HashKey, the first licensed retail cryptocurrency exchange platform in Hong Kong, plummeted by 85% in six months. According to CoinGecko data, from December 30, 2024, to May 30, 2025, HSK dropped from its all-time high of 2.38 U to 0.35 U, marking an 85% decline. The steep drop took many ecosystem supporters, token holders, and even HashKey employees by surprise, causing them to experience significant investment losses.

"The drop made me want to sue." a former HashKey employee expressed helplessly. There are likely many HashKey employees who share this sentiment. "It is estimated that there are over 200 current and former employees holding HSK tokens."

"Almost all employees of HashKey's trading platform and public chain hold HSK, and many of them receive bonuses in HSK tokens." It is understood that internal HashKey employees can convert up to 50% of their salary into HSK tokens. Many employees not only hold HSK through bonuses but also convert their monthly salary into HSK.

Behind HSK's poor performance, some deeper-seated issues in HashKey's development are gradually coming to light. "The high costs have burdened HashKey beyond its capacity, requiring further financing to support the sustainable development of its existing multi-line business," another industry practitioner stated.

According to several knowledgeable sources, HashKey's financial situation has become quite tense. An industry insider who preferred to remain anonymous stated: Recently, HashKey has carried out large-scale layoffs, with one-third of the employees being dismissed, some IT vendors experiencing delayed payments or even contract cancellations.

Two industry practitioners from different companies but close to HashKey stated: "HashKey has almost only six months' worth of cash flow left." In response to this, I reached out to HashKey for verification of the above information. HashKey stated: Indeed, some HSK was distributed to the team as incentives, and the high compliance costs are a fact. However, regarding the recent large-scale layoffs, HashKey stated it is untrue, claiming no dismissals and mentioning that the global headcount of the group remains at 600+.

What exactly happened to HashKey to cause such a significant price movement in its token? What is its current financial and profit situation, and through which channels is it seeking new financing? The development issues demonstrated by HashKey reflect what problems in the Hong Kong cryptocurrency industry ecosystem over the past three years? These have become topics of concern for many industry participants.

「Too Costly」

「Operating a compliant cryptocurrency exchange is just too costly.」 remarked an industry insider. Compliance, with its myriad licenses, is also a looming mountain on the shoulders of startups. As one of HashKey Group's core assets, the HashKey Exchange carries high expectations. However, it is also a veritable money pit.

· 「(In the early days), $100 million was spent in less than three months.」 shared a source close to HashKey Exchange.

· 「(Now) HashKey Exchange needs to spend around $10 million per month on average.」 「Of which, three to four tenths are compliance costs.」

· 「At its lowest, the monthly cost exceeds $5 million, and at its highest, it can reach $20-30 million per month.」 As for the specific amount of monthly expenses, HashKey officials responded that it involves company secrets and cannot be disclosed.

Compared to other cryptocurrency exchanges, HashKey Exchange has borne more compliance costs since its inception, such as needing to hire a batch of compliance executives, needing audits from three out of the Big Four accounting firms, needing to insure user assets... These are costs that other cryptocurrency exchanges generally do not have to bear. These are the costs of compliance, the mountains that press down on compliance-centric cryptocurrency exchanges like HashKey.

Previously, the author has revealed the compliance costs of Hong Kong cryptocurrency exchanges through multiple articles: applying for a VASP license requires HK$20-50 million; regulatory requirements mandate at least two ROs (HashKey has four), with one practitioner revealing: each RO's salary ranges from HK$2-5 million; regulatory requirements mandate cooperation with insurance companies, paying fees to insurance companies; regulatory requirements include collaboration with auditing firms, such as HashKey needing to collaborate with three of the Big Four auditing firms, an insider revealed: one of the auditing firms charges 5-10 times higher fees annually compared to regular fees in traditional industries, all of which incur additional costs... These are all part of the costs of being a "compliant cryptocurrency exchange," continuously stacking up.

As an emerging cryptocurrency exchange, before fully maturing, it has to bear higher costs than its competitors. At the same time, HashKey is seeking more financing channels. According to publicly available information, HashKey Group has brought in multiple institutional investors. In January 2024, HashKey Group completed Series A financing, with an amount of around $100 million. An insider revealed: China Merchants Bank and OKX were the main investors in this round of financing. In February 2025, Gaorong Capital invested $30 million in HashKey Group.

Although the amount of funding is not low, as previously analyzed, the compliance costs of HashKey Exchange itself are extremely high. Assuming a cost of $10 million per month, over $200 million has been spent to date. This has also put pressure on the entire HashKey Group.

A source from an institution who preferred to remain anonymous said, "There is only about half a year of cash flow left." Under such pressure, HashKey has also begun to comprehensively reduce costs. Another anonymous source revealed that HashKey recently carried out large-scale layoffs, with one-third of the staff being dismissed, some IT vendors experiencing delayed payments or contract terminations. However, HashKey has denied this information and stated that no layoffs have occurred.

Cost reduction is just one method; how can more cash flow be generated? Another industry source stated, "HashKey is seeking more VC funding and has never given up on the idea of a Hong Kong stock market listing."

Numerous Restrictions

Operating a compliant trading platform is not only very costly, but normal revenue channels are also subject to many restrictions. HashKey Exchange has been providing cryptocurrency trading services to the public for over 18 months. However, what puzzles many industry practitioners is why, to date, retail investors on HashKey Exchange can still only trade 4 cryptocurrencies.

On August 28, 2023, HashKey Exchange officially opened cryptocurrency trading services to retail investors, marking the start of providing Bitcoin (BTC) and Ethereum (ETH) trading services to the public as Hong Kong's first licensed virtual asset trading platform. However, 18 months later, retail investors on HashKey Exchange can only trade 4 cryptocurrencies (BTC, ETH, AVAX, LINK). Even professional institutional investors, according to an industry source, can only trade five to six dozen cryptocurrencies on HashKey Exchange.

In contrast, exchanges such as Binance, Coinbase, and Upbit have already listed hundreds of cryptocurrencies, and each new listing is a good way to attract new users and trading volume.

This has actually squeezed its space for expanding users, operating flexibly, and achieving higher profits. And this is just the tip of the iceberg in terms of HashKey Exchange's restricted monetization. In many aspects, compliant trading platforms have stricter limitations in attracting users compared to other trading platforms.

· "Almost every minor transaction requires reporting to regulators," said an insider at HashKey Exchange.

· "Some terms commonly used in the Crypto industry cannot be directly used in work chats and instead require substitution with another code word. For example, the rocket emoji symbol for the term 'to the moon' commonly used in the crypto industry cannot be used and must be replaced with a chili pepper emoji symbol, making it feel like engaging in guerrilla warfare."

Compliance is a double-edged sword. HashKey's advantage lies in being able to do many things that non-compliant crypto exchanges cannot do, such as facilitating inflow from compliant traditional capital sources like OTC and RWA. However, its disadvantage stems from not being able to engage in activities that non-compliant exchanges can, facing strict limitations. The question arises from the fact that many established businesses have been proven true market demands over time, while it remains to be seen if the new compliance direction represents a genuine need and the profit potential associated with such needs requires further validation over time.

“The market has not yet expanded, but has many players crammed in”

Due to early positioning and groundwork, HashKey is becoming a benchmark and leader in the Hong Kong crypto industry. However, its current market position is facing challenges from formidable competitors.

Another substantial pressure facing HashKey in reality is that it has not fully emerged, while strong players from other fields have all arrived in this still not-so-vast battlefield. They include local competitors in Hong Kong's crypto business like OSL and Futu, international competitors like Coinbase, Kraken, and Binance, as well as emerging local public chain competitors like Ant L2—Jovay.

HashKey Group has a relatively extensive presence, with business modules covering a trading platform (HashKey Exchange and HashKey Global), investment (HashKey Capital), OTC trading (HashKey OTC), infrastructure services (HashKey Cloud), tokenization services (HashKey Tokenisation), public chain (HashKey Chain), and brokerage services (HashKey Brokerage). These modules collectively form a highly compliant global Web3 ecosystem serving institutions, family offices, professional investors, and retail clients.

Hong Kong virtual asset OTC shop commonly found in shopping malls, office buildings, or street-level storefronts

In terms of exchange business, both HashKey Exchange and HashKey Global face fierce competition. Unlike the Hong Kong site, HashKey Global faces a wider range of competitors. For example, in the European market, it needs to compete with cryptocurrency giants such as Coinbase, Kraken, Binance, Bitget, OKX, as well as local exchanges. Its competitors already have stable and highly profitable positions. How HashKey will break through and become a key player using market-oriented approaches is a challenge.

As for the competitors of HashKey Exchange's Hong Kong site, the main competitors are currently OSL and Futu. These two companies themselves represent giants, not only with rich experience in new finance but also with strong capabilities. The potential competitor, Futu, has over 20 million users globally. Futu Securities is the largest retail broker in Hong Kong, with its Hong Kong user base accounting for over 40% of the local adult population. It has accelerated its entry into the Hong Kong market and has developed its own cryptocurrency trading system. On May 7th, Futu Securities International (Hong Kong) Limited announced the official launch of Bitcoin, Ethereum, and USDT deposit services.

Competitor OSL is backed by the "new first-line giant" in the crypto industry, Bitget, with sufficient funds and a comprehensive ecosystem. By choosing to go public on the Hong Kong Stock Exchange, OSL has become the first Bitcoin-related stock on the exchange. Over the past year, OSL's stock price has risen by 91%, reaching a market value of HK$8 billion. In contrast, HSK's token price has dropped by 85% in the past six months, with a market value of $47 million and a fully diluted valuation of $360 million.

However, an insider revealed that HashKey has been actively pursuing VC funding and pushing for a Hong Kong IPO, which, if successful, could provide ample financial support to HashKey.

In addition to the exchange business, in the public chain business, HashKey Chain also faces competition from similar players. Ant Group's L2 Jovay officially set sail in May, with the product manager indicating to the author that it is expected to launch its mainnet in the third quarter of this year. Ant Group, as an Asian fintech giant, is a key player in the entire new finance industry. Both Jovay and HashKey Chain focus on RWA and Hong Kong as important directions for development, and they may potentially engage in direct competition in the future.

The emergence of these three powerful competitors challenges HashKey's narrative as the "Hong Kong crypto unicorn." The Hong Kong market itself is not large, and the offshore market has not yet become competitive. In a market of this size, with many giants vying for a piece, the future for HashKey becomes even more uncertain.

What Challenges Has HashKey Faced in Hong Kong?

"Loud thunder, little rain." This is how many Web3 practitioners describe their feelings about the development of the crypto ecosystem in Hong Kong.

For example, after the approval of the BTC ETF in the United States, $45.7 billion flowed in; after the approval of the BTC ETF in Hong Kong, only $5.29 billion, often equivalent to just one day's net inflow of the US spot BTC ETF; after the approval of the Ethereum spot ETF in the United States, there was a total net inflow of $29 billion; after the approval of the Ethereum spot ETF in Hong Kong, there was only a total net inflow of $58.44 million. Similarly, Hong Kong's total net inflow is often less than one day's net inflow of the US Ethereum spot ETF.

Many times, the policy implementation in Hong Kong tends to be earlier than in the United States, such as the Ethereum spot ETF, stablecoin policies, and Ethereum staking policies. However, they always seem to be early risers but latecomers.

Comparing the cryptocurrency markets of South Korea and Dubai, Hong Kong's crypto ecosystem has also shown signs of fatigue. South Korea's retail users are very active, making its crypto ecosystem exceptionally vibrant. Many Web3 project entrepreneurs hope to make South Korea an important market when expanding their market. Dubai's open policies have allowed it to seize the offshore center status. Many exchanges and OTC players choose to channel funds into Dubai rather than Hong Kong.

"The first year of the crypto summit in Hong Kong was very lively, but the second and third years were much quieter," said one practitioner. "Over the past three years, Hong Kong has slowly lost the confidence of the cryptocurrency market." This may also explain in part why Hong Kong's first concept coin, HSK, has plummeted to this extent. People's belief in whether Hong Kong can become the global center of Web3 has been shaken.

The United States has nearly $50 billion in net inflows of BTC spot ETF, what does Hong Kong have? The United States has Coinbase, Europe has Kraken, and Dubai has Binance, Bybit, and other top-tier cryptocurrency companies globally. What does Hong Kong have? South Korea firmly holds onto its active local retail market, Dubai firmly grasps the offshore center market, what has Hong Kong successfully captured? These questions seem unanswered for the crypto ecosystem in Hong Kong and its leading enterprises.

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