As one of the early licensed crypto asset exchanges in Hong Kong, HashKey was once highly anticipated. However, in the context of its platform token experiencing an 85% big dump in six months and a series of layoffs causing public outcry, its "compliance path" is facing severe challenges. Foresight News recently addressed this in an article titled "Caught in a Public Relations Storm, What Happened to HashKey?" which explains HashKey's predicament and the issues surrounding the Hong Kong Web3 ecosystem.
Coin price big dump and internal pressure: from employees to the ecosystem, all are severely affected.
CoinGecko data shows that the HashKey Platform Token HSK has plummeted from a high of 2.38 USD to 0.35 USD since the beginning of last year, a drop of 85%. This has caught investors off guard and severely impacted internal morale.
Internal employees revealed that they can issue up to 50% of their salary in HSK tokens, so there are quite a few employees holding HSK through salaries or bonuses. However, the current coin price has turned this system into a high-risk "bet":
It is expected that over 200 current and former employees hold HSK.
At the same time, although HashKey denies rumors of layoffs, claiming that the global headcount remains over 600, insiders reveal that a third of employees have been laid off, and that payments to IT suppliers have been delayed or even terminated, reflecting that its financial pressure has come to light.
Compliance costs are devouring funds, making it difficult to finance and burning through the core capital.
"Running a compliant exchange is too costly." This statement resonates deeply with those in the exchange industry. HashKey Exchange spends an average of tens of millions of dollars each month, with as much as 30% to 40% allocated to compliance-related expenses, including hiring compliance personnel, auditing services, and insurance costs.
The high costs have made HashKey unable to bear the burden, necessitating the search for further financing to support the continuous development of its existing multi-line business.
Despite having completed over $130 million in financing since 2024, supported by funds from China Merchants Bank, OKX, and Gaorong Capital, it still appears inadequate compared to the enormous monthly expenses. An industry insider frankly stated: "The cash on hand is only enough to last another six months."
HashKey is still on the dangerous edge of "running out of money and not generating income", despite trying to seek more venture capital and even considering a Hong Kong stock listing.
Compliance as a shackle: income restrictions and product development hindered
HashKey opened retail trading in August 2023, but so far only offers 4 types of coins (BTC, ETH, AVAX, LINK) for trading. Compared to the hundreds of coins available on Binance or Coinbase, this selection seems quite limited. Professional investors can only trade around fifty or sixty types of coins, highlighting the challenges of product availability under compliance.
Almost everything has to be reported to the regulatory authorities, even the rocket emoji that metaphorically represents the "to the moon" concept in the work group has to be replaced with a chili emoji.
Such a high level of Compliance protects users, but it also weakens their ability to adapt flexibly to the market. In plain terms, it means profitability.
(HashKey holds "Hong Kong Compliance" edge promotion International Station Launchpool new coin issuance ZKJ)
The pressure of multi-line development is great, and competitors are watching closely.
HashKey Group's business spans across exchanges ( HashKey Exchange and HashKey Global ), capital ( HashKey Capital ), public chain ( HashKey Chain ), OTC, cloud infrastructure ( HashKey Cloud ), and tokenization services among others, but it also faces enormous management and resource pressure.
In terms of exchange business, local Hong Kong players like Futu and OSL, as well as overseas giants such as Coinbase, Kraken, and Binance, are competing for market share. In the public blockchain field, HashKey Chain is facing competition from local rivals like Ant Financial's L2 Jovay.
( Stablecoin to buy U.S. stocks? Online brokerages are entering the crypto space: Futu Securities reveals testing stablecoin deposit function )
Hong Kong Web3 Predicament: Doing It Right but Unable to Survive?
Industry perspectives indicate that HashKey's predicament is not just a single company's issue, but a microcosm of the "Hong Kong-style Web3 predicament":
Decent compliance and a rigorous system, yet lacking support from the real market demand. Compared to the United States, South Korea, and Dubai, Hong Kong's crypto policy, although introduced earlier, fails to effectively attract funds and users.
( Hong Kong regulates stablecoins! The next step is to regulate OTC and custody services through the "Stablecoin Regulation Bill" ).
Taking the Ethereum spot ETF as an example, the scale in the United States reached 2.9 billion USD, while in Hong Kong it was only 58.44 million USD, clearly exposing a crisis of market confidence.
In other words, South Korea has captured the active retail ecosystem in the country, while Dubai's offshore and open characteristics have attracted numerous exchanges and OTC players; in contrast, Hong Kong's positioning is unclear:
No matter how perfect the system design is, if there are no corresponding users and market, it will ultimately be in vain.
Disclosure of Interests: Foresight News is an investor in competitor OSL.
Foresight News pointed out the issues of HashKey's cash flow tightness and layoffs, but it is undeniable that there is a capital relationship between Foresight and its competitor OSL exchange.
According to previous reports, Liu Shuai, the founder of Foresight Ventures, has become the largest shareholder of BC Technology, the parent company of OSL, through BGX Group, with a shareholding ratio of 29.97%.
( Invest in the Hong Kong licensed exchange OSL's parent company, Foresight Ventures flags operator BC Technology)
Although it cannot be asserted that there is an absolute correlation between the stance of the report and the investment background, potential conflicts of interest may indeed have an objective impact on its content. Readers should maintain a neutral and cautious attitude when interpreting relevant information.
Looking to the future: Is it worth waiting to adhere to Compliance?
Some internal employees still express willingness to "give the company a little more time". The new employee @Morty_happy shares:
HashKey is not perfect, nor is it without problems. But it has chosen a path that is not as bustling, yet may be more secure.
The road to Compliance is difficult, but it may also herald a turning point for the future of the industry. The success or failure of HashKey will also become an important test of whether Hong Kong's crypto industry can step onto the world stage.
How Compliance Costs Crush Exchanges? HashKey's Financial Pressure and Layoff Controversy Expose the Gap Between Ideal and Reality First Appeared on Chain News ABMedia.
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How do compliance costs crush exchanges? HashKey's financial pressures and layoff controversies expose the gap between ideals and reality.
As one of the early licensed crypto asset exchanges in Hong Kong, HashKey was once highly anticipated. However, in the context of its platform token experiencing an 85% big dump in six months and a series of layoffs causing public outcry, its "compliance path" is facing severe challenges. Foresight News recently addressed this in an article titled "Caught in a Public Relations Storm, What Happened to HashKey?" which explains HashKey's predicament and the issues surrounding the Hong Kong Web3 ecosystem.
Coin price big dump and internal pressure: from employees to the ecosystem, all are severely affected.
CoinGecko data shows that the HashKey Platform Token HSK has plummeted from a high of 2.38 USD to 0.35 USD since the beginning of last year, a drop of 85%. This has caught investors off guard and severely impacted internal morale.
Internal employees revealed that they can issue up to 50% of their salary in HSK tokens, so there are quite a few employees holding HSK through salaries or bonuses. However, the current coin price has turned this system into a high-risk "bet":
It is expected that over 200 current and former employees hold HSK.
At the same time, although HashKey denies rumors of layoffs, claiming that the global headcount remains over 600, insiders reveal that a third of employees have been laid off, and that payments to IT suppliers have been delayed or even terminated, reflecting that its financial pressure has come to light.
Compliance costs are devouring funds, making it difficult to finance and burning through the core capital.
"Running a compliant exchange is too costly." This statement resonates deeply with those in the exchange industry. HashKey Exchange spends an average of tens of millions of dollars each month, with as much as 30% to 40% allocated to compliance-related expenses, including hiring compliance personnel, auditing services, and insurance costs.
The high costs have made HashKey unable to bear the burden, necessitating the search for further financing to support the continuous development of its existing multi-line business.
Despite having completed over $130 million in financing since 2024, supported by funds from China Merchants Bank, OKX, and Gaorong Capital, it still appears inadequate compared to the enormous monthly expenses. An industry insider frankly stated: "The cash on hand is only enough to last another six months."
HashKey is still on the dangerous edge of "running out of money and not generating income", despite trying to seek more venture capital and even considering a Hong Kong stock listing.
Compliance as a shackle: income restrictions and product development hindered
HashKey opened retail trading in August 2023, but so far only offers 4 types of coins (BTC, ETH, AVAX, LINK) for trading. Compared to the hundreds of coins available on Binance or Coinbase, this selection seems quite limited. Professional investors can only trade around fifty or sixty types of coins, highlighting the challenges of product availability under compliance.
Almost everything has to be reported to the regulatory authorities, even the rocket emoji that metaphorically represents the "to the moon" concept in the work group has to be replaced with a chili emoji.
Such a high level of Compliance protects users, but it also weakens their ability to adapt flexibly to the market. In plain terms, it means profitability.
(HashKey holds "Hong Kong Compliance" edge promotion International Station Launchpool new coin issuance ZKJ)
The pressure of multi-line development is great, and competitors are watching closely.
HashKey Group's business spans across exchanges ( HashKey Exchange and HashKey Global ), capital ( HashKey Capital ), public chain ( HashKey Chain ), OTC, cloud infrastructure ( HashKey Cloud ), and tokenization services among others, but it also faces enormous management and resource pressure.
In terms of exchange business, local Hong Kong players like Futu and OSL, as well as overseas giants such as Coinbase, Kraken, and Binance, are competing for market share. In the public blockchain field, HashKey Chain is facing competition from local rivals like Ant Financial's L2 Jovay.
( Stablecoin to buy U.S. stocks? Online brokerages are entering the crypto space: Futu Securities reveals testing stablecoin deposit function )
Hong Kong Web3 Predicament: Doing It Right but Unable to Survive?
Industry perspectives indicate that HashKey's predicament is not just a single company's issue, but a microcosm of the "Hong Kong-style Web3 predicament":
Decent compliance and a rigorous system, yet lacking support from the real market demand. Compared to the United States, South Korea, and Dubai, Hong Kong's crypto policy, although introduced earlier, fails to effectively attract funds and users.
( Hong Kong regulates stablecoins! The next step is to regulate OTC and custody services through the "Stablecoin Regulation Bill" ).
Taking the Ethereum spot ETF as an example, the scale in the United States reached 2.9 billion USD, while in Hong Kong it was only 58.44 million USD, clearly exposing a crisis of market confidence.
In other words, South Korea has captured the active retail ecosystem in the country, while Dubai's offshore and open characteristics have attracted numerous exchanges and OTC players; in contrast, Hong Kong's positioning is unclear:
No matter how perfect the system design is, if there are no corresponding users and market, it will ultimately be in vain.
Disclosure of Interests: Foresight News is an investor in competitor OSL.
Foresight News pointed out the issues of HashKey's cash flow tightness and layoffs, but it is undeniable that there is a capital relationship between Foresight and its competitor OSL exchange.
According to previous reports, Liu Shuai, the founder of Foresight Ventures, has become the largest shareholder of BC Technology, the parent company of OSL, through BGX Group, with a shareholding ratio of 29.97%.
( Invest in the Hong Kong licensed exchange OSL's parent company, Foresight Ventures flags operator BC Technology)
Although it cannot be asserted that there is an absolute correlation between the stance of the report and the investment background, potential conflicts of interest may indeed have an objective impact on its content. Readers should maintain a neutral and cautious attitude when interpreting relevant information.
Looking to the future: Is it worth waiting to adhere to Compliance?
Some internal employees still express willingness to "give the company a little more time". The new employee @Morty_happy shares:
HashKey is not perfect, nor is it without problems. But it has chosen a path that is not as bustling, yet may be more secure.
The road to Compliance is difficult, but it may also herald a turning point for the future of the industry. The success or failure of HashKey will also become an important test of whether Hong Kong's crypto industry can step onto the world stage.
How Compliance Costs Crush Exchanges? HashKey's Financial Pressure and Layoff Controversy Expose the Gap Between Ideal and Reality First Appeared on Chain News ABMedia.