Original Article Title: "Caught in a Public Opinion 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 peak of 2.38 U to 0.35 U, representing an 85% decline. The sharp drop took many ecosystem supporters, token holders, and even HashKey employees by surprise, leading to significant investment losses.

"The drop makes me want to seek legal recourse." A former HashKey employee expressed helplessly. There may be quite a few HashKey employees who share this sentiment. "It is estimated that over 200 current and former employees hold HSK."

"Nearly all employees of the HashKey trading platform and public chain hold HSK, and many employees receive bonuses in HSK tokens." It is understood that HashKey's internal 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 salaries into HSK.

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

According to multiple sources, HashKey's financial situation has become quite tense. A practitioner who preferred to remain anonymous said: HashKey recently carried out large-scale layoffs, with a third of the employees being laid off, some IT suppliers experiencing delayed payments or contract cancellations.

Two practitioners from different companies but close to HashKey stated: "HashKey has almost only six months of cash flow in its account." In response to this, I reached out to HashKey for confirmation of the above information. HashKey stated: indeed, they have issued part of the team with HSK as an incentive, and the high compliance costs are a fact. However, regarding the recent large-scale layoffs, HashKey stated it is inaccurate, claiming no layoffs and mentioning that the global headcount of the group has been consistently above 600 +.

What exactly happened to HashKey that caused such a significant price fluctuation 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 three-year development of the Hong Kong cryptocurrency industry ecosystem? This has become a topic of concern for many practitioners.

“A Money Pit”

“Operating a compliant cryptocurrency exchange is a money pit,” noted an industry insider. Compliance is not only a series of licenses but also a mountain weighing on the shoulders of startups. As one of HashKey Group's core assets, HashKey Exchange carries high expectations. However, it is also a real money pit.

· “(In the early days), $100 million was spent within less than three months,” revealed an insider close to HashKey Exchange.

· “(Now) HashKey Exchange needs to spend around $10 million per month on average.” “Three to four tenths of that is for compliance costs.”

· “At its lowest, it was over $5 million per month, and at its peak, it could reach $20-30 million per month.” As for the specific amount of monthly expenses, the HashKey official response cited company confidentiality as a reason for non-disclosure.

Compared to other cryptocurrency exchanges, HashKey Exchange has shouldered more compliance costs since its inception. This includes the need to hire a batch of compliance executives, undergo audits from three of the Big Four accounting firms, and insure user assets... These are costs that other cryptocurrency exchanges generally do not have to bear. These are the costs of compliance, the mountains pressing down on HashKey and other compliant cryptocurrency exchanges.

Previously, I exposed the compliance costs of Hong Kong cryptocurrency exchanges through multiple articles: obtaining 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 necessitate collaboration with insurance companies, paying insurance fees; regulatory requirements dictate working with auditing companies, such as HashKey needing to collaborate with three of the Big Four accounting firms, with an insider disclosing: one auditing firm's annual fee is 5-10 times higher than the fees of ordinary traditional industry projects, necessitating additional costs... All of these are part of the costs of a “compliant cryptocurrency exchange,” continuously stacking up.

As an emerging cryptocurrency exchange, before reaching full maturity, it needs to bear more costs than its competitors. At the same time, HashKey is looking for more sources of funding. Public information shows that HashKey Group has brought in multiple institutional investors. In January 2024, HashKey Group completed a Series A financing round, raising approximately $100 million. An insider revealed: China Merchants Bank and OKX were the main investors in this round of financing. In February 2025, GGV Capital invested $30 million in HashKey Group.

Although the funding amount is not low, as mentioned in the previous analysis, the compliance cost of HashKey Exchange itself is extremely high. Assuming a monthly cost of $10 million, over $200 million has been spent so far. This has also put pressure on the entire HashKey Group.

An anonymous industry practitioner 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 practitioner stated that HashKey recently carried out large-scale layoffs, one-third of the employees were let go, some IT vendors had delayed payments or even terminated contracts. However, HashKey stated that this information is not true and claimed that no layoffs have occurred.

Cost reduction is just one method. How to generate more cash flow? Another industry insider said, "HashKey is seeking more VC funding and has never given up the idea of a Hong Kong IPO."

Multiple Restrictions

Running 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 practitioners is why, to date, retail investors on HashKey Exchange can only trade 4 cryptocurrencies?

On August 28, 2023, HashKey Exchange officially opened cryptocurrency trading services to retail investors, marking the start of its public offering of Bitcoin (BTC) and Ethereum (ETH) 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 professional, can only trade around fifty to sixty cryptocurrencies on HashKey Exchange.

In contrast, platforms like Binance, Coinbase, and Upbit have already listed hundreds of cryptocurrencies. Each new coin listing is a good way to attract new users and trading volume.

This has actually squeezed its space for expanding users, agile operation, and achieving higher profitability. And this is just the tip of the iceberg in terms of the limitations on HashKey Exchange's revenue generation. In many respects, compliant trading platforms have stricter restrictions on attracting users than other trading platforms.

· "Almost every small transaction requires reporting to regulators," a HashKey Exchange insider once said.

· "Some terms used in the Crypto industry cannot be directly used in work chat groups and instead need to be replaced with another code word. For example, the rocket emoji symbol for the commonly used term 'to the moon' in the crypto industry cannot be used; instead, it has to be replaced with a chili emoji symbol. It feels like engaging in guerrilla warfare."

Compliance is a double-edged sword. HashKey's advantage lies in the fact that it can do many things that non-compliant crypto exchanges cannot do, such as some inflow of compliant traditional capital, OTC, RWA, etc. Its disadvantage is also related to this: many things that non-compliant exchanges can do, HashKey cannot do and is strictly limited. The issue is that many old businesses have been proven over time to be legitimate market demands, while whether compliant new directions represent a true demand and how much profit potential such a demand has still require further validation over time.

Market Has Not Yet Expanded, but Many Players Are Already Crowded In

Due to its early layout and cultivation efforts, HashKey is becoming a benchmark and leading enterprise in the Hong Kong crypto industry. However, its current market positioning is facing challenges from strong competitors.

Another pressure faced by HashKey in reality is that it has not truly emerged, while strong players from other fields have all arrived on this not-so-broad battlefield, including: local Hong Kong crypto businesses competitors like OSL and Futu; international businesses competitors like Coinbase, Kraken, Binance, and new local public chain competitors like Ant L2—Jovay.

HashKey Group's presence is quite extensive. The business modules of HashKey Group cover trading platforms (HashKey Exchange and HashKey Global), investment (HashKey Capital), OTC trading (HashKey OTC), infrastructure services (HashKey Cloud), tokenization services (HashKey Tokenisation), public chains (HashKey Chain), and brokerage services (HashKey Brokerage). These modules together form a highly compliant global Web3 ecosystem, serving institutions, family offices, professional investors, and retail clients.

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

In terms of exchange platform business, both HashKey Exchange and HashKey Global face fierce competition. Unlike the Hong Kong site, HashKey Global faces a more extensive range of competitors. For example, on the European site, it needs to compete with cryptocurrency giants such as Coinbase, Kraken, Binance, Bitget, OKX, and local exchanges. Its competitors already have stable and highly profitable territory. How HashKey breaks through the encirclement through a market-oriented approach has become a challenge.

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

Competitor OSL has a more complete ecosystem. In the past year, OSL's stock price has risen by 91%, with a market value of HK$8 billion. In comparison, HSK's token price has fallen by 85% in the past six months, with a market value of $47 million and an FDV of $360 million.

However, an insider revealed that HashKey has been actively pushing for VC financing and has been actively promoting a Hong Kong IPO. If this move is successful, it may provide HashKey with ample financial support.

In addition to the exchange platform business, in the public chain business, HashKey Chain also faces competition from competitors in the same field. Ant Group's L2 Jovay officially set sail in May, and the product manager has told the author that it is expected to launch the mainnet in the third quarter of this year. Ant Group, as an Asian fintech giant, is a powerhouse in the entire new finance industry. Both Jovay and HashKey Chain have RWA and Hong Kong as their important development directions, and they may also engage in positive competition in the future.

The emergence of these three powerful competitors is challenging HashKey's narrative as the "Hong Kong cryptocurrency unicorn." The Hong Kong market itself is not large, and the offshore market has not yet formed competitiveness. With many giants competing in this size of market, HashKey's future has become even more unpredictable.

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 US BTC ETF, $45.7 billion flowed in; after the approval of the Hong Kong BTC ETF, only $5.29 billion flowed in, often just the amount of net inflow into the US spot BTC ETF in a single day; after the approval of the US Ethereum spot ETF, a total of $29 billion net inflow was recorded; after the approval of the Hong Kong Ethereum spot ETF, only $58.44 million net inflow was recorded. Similarly, Hong Kong's total net inflow is often less than the net inflow into the US Ethereum spot ETF in a single day.

Many times, Hong Kong's policy implementation is often earlier than that of the US, such as the Ethereum spot ETF, stablecoin policy, and Ethereum staking policy. But often, they woke up early only to end up late.

Comparing the cryptocurrency markets of South Korea and Dubai, Hong Kong's crypto ecosystem also shows 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 during market expansion. Dubai's open policies have allowed it to seize the offshore center, with many exchanges and OTC players choosing to channel funds into Dubai rather than Hong Kong.

“The first year of the cryptocurrency summit in Hong Kong was very lively, but in the second and third years, it was much quieter,” one practitioner said. “Over the past three years, Hong Kong has slowly lost the confidence of the cryptocurrency market.” This may also explain part of the reason why Hong Kong's first concept coin, HSK, has plummeted to this level; people's belief in whether Hong Kong can become a global Web3 hub has been shaken.

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

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