What is HashKey, a compliant crypto exchange that is about to celebrate its 1st anniversary, doing? 👀
HashKey Exchange is about to celebrate its 1st anniversary. This is the only licensed and compliant crypto exchange in Hong Kong. It was highly anticipated by crypto industry practitioners in the first half of 2023. Everyone naively believed that it would be a hero who stepped on a colorful cloud to save the industry from the quagmire. In the end, what saved the industry and everyone's balance sheet was the approval of the Bitcoin spot ETF, the peak of US Treasury yields, and the Trump deal.
But this is actually understandable. As a pilot project of the East China University of Science and Technology in Hong Kong's regulatory sandbox, a self-help Plan B for the intangible cultural heritage of the financial center, and an X-factor configuration channel for Chinese institutions to hedge against systemic risks, HashKey's business freedom is far lower than that of its counterpart Coinbase of the West China University of Science and Technology. What does it mean to "dance in shackles"? You can see it at a glance when you open the Hong Kong site of HashKey Exchange.
In addition, the US hegemony in the global financial market is real and concrete. In this cycle, BTC and ETH spot ETFs, stablecoins such as USDT and USDC, and US debt tokenization RWA projects such as MakerDAO and OndoFinance have completely and forever changed the basic rules of the game in the crypto industry. Silicon Valley and Wall Street have almost completely mastered the pricing power of the primary and secondary markets in the crypto industry. Last year, our good expectations for the HashKey exchange now seem to be a typical market expectation overload.
So, what has HashKey Exchange, which has gone through the process of carrying high expectations - failing to meet expectations - and making steady progress, done this year?
1️⃣ “Dual-wheel drive” strategy to achieve growth in exchange business
In a broad sense, centralized exchanges are the earliest chain abstraction products, but compared with current chain abstraction solutions, they are implemented using traditional Web2 technology architecture. Structure determines characteristics. For centralized exchanges, whether compliant or non-compliant, the first task is to achieve user growth and increase the scale of capital (AUM).
Faced with realistic constraints, Hashkey Exchange has chosen a "two-wheel drive" strategy. On the one hand, it continues to tap into its potential within the compliance framework, establishes cooperative relationships with a number of Hong Kong securities firms, and vigorously promotes Omnibus broker comprehensive accounts to allow local users in Hong Kong to You can trade cryptocurrencies without changing your trading habits; on the other hand, Hashkey Exchange launched its global site in April 2024, actively listing new assets, debuting $EIGEN, ALEO, and IEO $MAK, $BOX and $ SHIFT. At the same time, seizing the market trend, we launched the Tap-to-Earn mini game "Big Golden Dog" to attract traffic from Telgram. Since its launch, the game has 7.5 million users.
The market feedback of Hashkey Exchange's strategy is quite good. In the data released by Hashkey Exchange in September, the transaction volume of Omnibus exceeded HK$2 billion, up 74% from the previous month; the exchange added 150,000 new registered users, and the number of trading users increased by 150% from the previous month.
At present, Hashkey Exchange (Hong Kong Station + Global Station) has 350,000 registered users, among which thousands have passed the Hashkey professional trader PI verification (capital greater than 8 million Hong Kong dollars). The capital scale of Hashkey Exchange has grown from 0 to 5 billion Hong Kong dollars.
Although the above data growth is very impressive, compared with the offshore exchanges' combined daily trading volume of hundreds of billions of dollars, Hashkey Exchange, as a compliant exchange, is still in the budding stage from 0 to 1.
However, in general, compliance is the general trend of the crypto industry. Although the release of Binance founder CZ from prison has aroused the imagination of some industry insiders, it will not change the general trend of the shrinking market size of offshore exchanges, and the curtain of the era of regulatory arbitrage is slowly falling.
In an interview with reporters, HashKey CEO Livio Weng predicted: "2024 will be a big year for compliance in the crypto industry. It is expected that in the next 2-3 years, the market share of licensed exchanges may exceed 50%." As the barriers to regulatory compliance increase marginally, latecomers can only eat the "hot pot base" of the advanced ones.
The compliance barriers currently built by HashKey are:
1. Multi-level license moat
--Advantages of licenses with full regional coverage:
Hong Kong: Obtaining all required virtual asset licenses from the SFC
Singapore: Obtained MAS OTC Major Payment Institution License
Japan and Bermuda: Have also obtained corresponding licenses
Formed the most complete compliance license system in the Asia-Pacific region
--Hong Kong's special status:
As one of the only two licensed compliant exchanges in Hong Kong
First to conduct pilot in Hong Kong regulatory sandbox
Become an important participant in the transformation of Hong Kong's financial center
2. Institutional-level service system
--Professional Investor (PI) Services:
Capital verification threshold: HK$8 million
Building a high-net-worth customer service ecosystem
--Omnibus Broker Innovation:
In-depth cooperation with Hong Kong securities firms
Allowing traditional financial users to seamlessly access the crypto market
3. Strategic Cooperation Network
--Regulatory cooperation:
Close collaboration with the Hong Kong Monetary Authority
Participate in regulatory policy-making discussions
Become a practitioner of compliance standards
--Financial institution cooperation:
Establish cooperation with traditional financial institutions such as ZA Bank
Work with HKDAS (Hong Kong Digital Asset Association) to develop industry standards
Establish Omnibus service cooperation with leading securities firms
Compliance barriers are HashKey's core competitive advantage and a key feature that distinguishes it from other exchanges. Through multi-dimensional layout, HashKey is transforming regulatory compliance into sustainable business advantages, which will become a key factor in its success in the next round of industry development cycle.
2️⃣Build the next generation of fintech infrastructure
At the just concluded Hong Kong Fintech Week, Dr. Xiao Feng, Chairman and CEO of HashKey Group, the parent company of HashKey Exchange, made a new statement following his statement that “Web3 will enter the Internet’s ‘1995 Moment’ starting in 2024”: In the financial field, in the next ten years, Web3 will build a new financial market system that is different from the current one. He believes that in the future, there will be two financial market systems coexisting in the world, one is the traditional financial market system based on bank accounts, and the other is the encrypted financial market system based on encrypted accounts and tokens.
This is not only the future strategy of HashKey Group, but also the plan that the HashKey team is currently working hard to implement. Hashkey is currently building the next generation of financial technology infrastructure from the following three aspects:
--HashKey Chain Ecosystem:
Positioning: Not a simple exchange L2, but a compliance-oriented financial infrastructure
Key tracks: BTCFi, PayFi, Stablecoin, RWA, DePIN
Goal: Create a full-stack solution that connects Web2 and Web3
Schedule: Public beta is expected to start in Q4, and the mainnet will be launched within the year
--Tokenized service infrastructure:
HashKey Tokenisation Service in collaboration with HashKey Cloud
Participated in the Ensemble project of the Hong Kong Monetary Authority
Creating liquidity for traditional and Web3 projects
Build a bridge between the real economy and digital assets
--Technical foundation support:
HashKey Cloud provides node verification services across 80+ public chains
Asset management scale reaches 1.2 million (calculated in ETH)
New product lines such as Restaking and Bitcoin Node Verification
Among them, HashKey Chain is the cornerstone of Hashkey's strategy to build the next-generation financial technology infrastructure.
HashKey Chain will deeply deploy 5 core tracks:
BTCFi (Bitcoin Finance):
Likely to focus on compliant Bitcoin collateral lending
Developing institutional-grade Bitcoin derivatives
Innovation in linkage with traditional financial products
PayFi (Payment Finance):
Building a compliant cross-border payment network
Providing institutions with efficient clearing systems
Integration solutions with traditional payment systems
Stablecoin:
Hong Kong dollar stablecoin infrastructure is expected to be launched
Building a stable currency settlement center in the Asia-Pacific region
Linking the traditional foreign exchange market with the crypto market
RWA (physical assets on the chain):
Promoting Security Tokenization (STO)
Tokenization of physical assets such as real estate
Building a compliant secondary trading market
DePIN (Decentralized Physical Infrastructure):
Linking the real economy infrastructure
Promoting data and equipment assetization
Explore new business models
Frankly speaking, the transition from platformization to “infra-ization” has become an industry consensus. The integration of on-chain and off-chain and the extension to the upstream of the industrial chain are the general trends of this cycle. For example, Coinbase has devoted all its efforts to incubate Rollup L2 Base and has obtained impressive growth data.
However, HashKey Chain is different from other L2s that blindly pursue transaction volume and TVL. It takes a differentiated path of serving institutions and focusing on compliance. This may make its development seem slow, but in the long run, this "slow is fast" strategy may be more in line with the law of industry development. Especially in the context of Hong Kong's accelerated development of crypto assets, HashKey Chain is expected to become an important infrastructure connecting traditional finance and Web3, and contribute to the institutionalization and compliance of the entire industry.
3️⃣ Empowering the platform currency HSK to create a golden shovel for the crypto industry in the next 10 years
In the crypto industry, the fate of platform coins is often closely tied to the fate of exchanges. BNB witnessed Binance’s rise from zero to the world’s number one, and HT experienced the ups and downs of Huobi’s rise and fall. Today, HSK launched by HashKey will also become an important milestone for this low-key and pragmatic Hong Kong compliant exchange.
Unlike other exchange platform coins that "follow the wave of speculation", the design of HSK reflects HashKey's consistent "slow is fast" concept. Its core highlight lies in the "20% platform profit permanent repurchase" mechanism - this is not a short-term speculation gimmick, but a mechanism design that binds the platform value in the long term. By linking the platform's profits with the value of the token, HSK attempts to create a sustainable value capture model.
HSK's ecological layout also reflects its strategic thinking:
Value support:
20% of the platform profit will be used for repurchase and permanently destroyed
Linked to actual business income, not castles in the air
Provide additional benefits to coin holders through mechanisms such as LaunchPad and LaunchPool
Application scenarios:
As a payment tool for platform service fees
For user growth and community incentives
Get access to a variety of value-added services
Ecosystem Synergy:
Synergistic effect with HashKey Chain
Connecting the value circulation inside and outside the exchange
Stimulate the development of the entire ecosystem
In a sense, the design of HSK reflects HashKey's thinking about the future of the industry - how to build a sustainable crypto ecosystem under the framework of regulatory compliance. This is not a tool for "cutting leeks", but an infrastructure that links value and serves users.
In this era full of uncertainty, HSK's development trajectory may give the industry some inspiration: compliance is not a shackle, but a new starting point for innovation; stability is not conservatism, but the cornerstone of long-term development. In the next decade, as the encryption industry gradually matures, this platform coin that emphasizes long-term value and ecological construction may show stronger vitality.
Conclusion
HashKey recently held 17 events during the Fintech Week, which showed us that this low-key exchange is playing a bigger game. HashKey is not only consolidating its existing business foundation, but also preparing for the upcoming changes:
On the token side, HSK will become the link connecting the ecosystem
On the technical side, HashKey Chain will become a test field for compliance innovation
On the business side, the full license advantage will be transformed into a market barrier
On the strategic side, Hong Kong's hub status will become increasingly prominent
From exchanges to financial technology infrastructure, from a single business to the entire industry chain, HashKey aims not only to be the Coinbase of Hong Kong, but also to become a bridge connecting the East and West crypto worlds. In this era full of uncertainty, HashKey's advancement may represent the future of the Asian crypto market.
The US election on November 5 will be a crucial node in the timeline of the history of the Crypto industry. As the first "crypto government" in American history, Trump's election will greatly promote the large-scale adoption of cryptocurrency and Web3.
The traditional financial world will accelerate its embrace of Crypto and its underlying technology, blockchain. Currently, the EU has passed the EU MICA, a legal framework for crypto compliance, and the Hong Kong VASP regulatory system has also been released recently. The much-anticipated US FIT21 bill is likely to be passed after the election.
After the United States, the center of the world empire, has a comprehensive crypto compliance legal framework, the borders of this world empire (Japan, South Korea, Southeast Asia, and the Middle East) will follow suit. So the question is, how should another world empire, the University of Tokyo, respond to this wave of financial paradigm innovation and the new digital currency system?
Looking eastward, I see Hong Kong and the Hashkey of Base Hong Kong.
