Caught in a storm of public opinion, what happened to HashKey?

big dump, layoffs, cash flow crisis: HashKey is at the center of the storm.

Written by: Joe Zhou, Foresight News

The platform token has experienced a big dump of 85% in six months. What has happened to HashKey, the first licensed retail cryptocurrency exchange in Hong Kong?

According to CoinGecko data, from December 30, 2024 to May 30, 2025, HSK fell from a peak of 2.38 U to 0.35 U, a six-month decline of 85%. Such a high decline caught many ecosystem supporters, token holders, and even HashKey employees by surprise, resulting in significant investment losses for them.

“I’m so upset that I want to defend my rights.” a former employee of HashKey expressed helplessly. There may be quite a few HashKey employees who hold this view. “It is estimated that over 200 current and former employees hold HSK.”

“HashKey exchange and public chain employees almost all hold HSK, and many employees receive their bonuses in HSK.” It is reported that HashKey internal employees can exchange up to 50% of their salary for HSK tokens. Many employees not only hold HSK through bonuses but also convert their monthly salaries into HSK.

Behind the poor performance of HSK, some deeper issues in the development of HashKey are gradually coming to light.

“The high costs have weighed heavily on HashKey, which needs to seek further financing to support the continued development of its existing multi-line business,” said another industry participant.

According to multiple informed sources, HashKey’s financial situation has become quite tense. A practitioner who wished to remain anonymous stated that HashKey recently launched a large-scale layoff, with one third of the employees being dismissed, and some IT suppliers have faced delayed payments or even contract cancellations.

Two practitioners from different companies but close to HashKey said, “HashKey has almost only six months of cash flow on its books.”

In this regard, the author sought verification from HashKey regarding the above information. HashKey stated: It is true that a portion of HSK was distributed to the team as incentives, and that compliance costs are indeed high. However, regarding the recent large-scale layoffs, HashKey stated that this is not true, that there have been no layoffs, and that the global workforce of the group has consistently remained at over 600 people.

What exactly happened with Hashkey that caused a significant fluctuation in its token price? What is the current financial and profit situation, and through which channels is it seeking new financing? The development issues presented by HashKey reflect what problems exposed in the Hong Kong cryptocurrency industry ecosystem over the past three years? This has become a topic of concern for many practitioners.

“It’s too costly”

“Running a compliant cryptocurrency exchange is too costly,” a person in the industry pointed out.

Compliance is a license for franchising, and it is also a mountain that weighs heavily on the shoulders of startups. As one of the core assets of HashKey Group, HashKey Exchange is highly anticipated. However, at the same time, it is also a genuine money-guzzler.

“(In the early days) $100 million was spent in less than three months,” a source close to HashKey Exchange revealed.

“(Currently) HashKey Exchange needs to spend around 10 million dollars every month.” “Of which, 30 to 40 percent is used for compliance costs.”

“At the lowest, it exceeds 5 million USD per month, and at its peak, it can reach two to three million USD per month.” However, regarding the specific amount of monthly expenses, HashKey’s official response mentioned that it involves company confidentiality and cannot be disclosed.

Compared to other cryptocurrency exchanges, HashKey Exchange has had to bear more compliance costs since its inception, such as needing to hire a group of executives in compliance, undergoing audits from three of the Big Four auditing firms, and purchasing insurance for users’ assets… All of these are costs that other cryptocurrency exchanges generally do not incur. These are the costs of compliance, which are like mountains pressing down on compliant cryptocurrency exchanges like HashKey.

The author has previously revealed the compliance costs of Hong Kong cryptocurrency exchanges through multiple articles: applying for a VASP license costs between 20 million and 50 million HKD; regulatory requirements mandate at least two ROs (HashKey has four), and one practitioner disclosed: the salary for each RO ranges from 2 million to 5 million HKD; regulatory requirements necessitate cooperation with insurance companies, which involves fees to be paid to them; regulatory requirements also demand collaboration with auditing firms, for instance, HashKey needs to work with three of the Big Four auditing firms, and an insider disclosed: the annual fee of one of these auditing firms is 5 to 10 times higher than the fees for ordinary traditional industry projects, all of which incur additional costs… all of these are continuously compounded as part of the “compliance cryptocurrency exchange” costs.

As an emerging cryptocurrency exchange, it needs to bear more costs than its competitors before it has fully matured. At the same time, HashKey is looking for more financing channels.

According to public information, HashKey Group has introduced several institutional investors. In January 2024, HashKey Group completed its Series A funding, raising approximately $100 million. An insider revealed that CMB and OKX were the main investors in this round of financing. In February 2025, Gao Rong Capital invested $30 million in HashKey Group.

Although the financing amount is not low, as previously analyzed, the compliance costs of HashKey Exchange itself are extremely high. Assuming a monthly cost of 10 million USD, it has spent over 200 million USD to date. This also puts pressure on the entire HashKey Group.

An unnamed institutional practitioner stated: “There is almost only half a year of cash flow left.”

Under such pressure, HashKey has also begun to comprehensively reduce costs. An unnamed industry insider stated that HashKey recently initiated large-scale layoffs, with one-third of its employees being dismissed, and some IT suppliers facing delayed payments or even contract terminations. However, in response to this information, HashKey stated that it is not true and that no layoffs have occurred.

Reducing costs is just one method; how to obtain more cash flow? Another practitioner stated: “HashKey is seeking more VC financing and has not given up on the idea of listing on the Hong Kong stock market.”

Restrictions abound

Running a compliant exchange not only costs a lot of money, 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, yet what many practitioners find perplexing is: why can retail investors on HashKey Exchange still only trade 4 cryptocurrencies?

On August 28, 2023, HashKey Exchange officially opened cryptocurrency trading services to retail investors, marking its formal launch as Hong Kong’s first licensed virtual asset trading platform to publicly offer trading services for Bitcoin (BTC) and Ethereum (ETH). 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 insider, can only trade fifty to sixty cryptocurrencies on HashKey Exchange.

In contrast, exchanges like Binance, Coinbase, and Upbit have launched hundreds of cryptocurrencies, and each time a new cryptocurrency is launched, it is a good way to acquire new users and increase trading volume.

This actually squeezes its space for expanding users, flexible operations, and achieving higher profits. And this is just the tip of the iceberg for the limitations on HashKey Exchange’s ability to make money. In many respects, compliant exchanges face stricter limitations in their actions to attract users compared to other exchanges.

“Almost every small and large matter needs to be reported to regulators,” a source within HashKey Exchange once stated.

“Some terms in the Crypto industry cannot be used directly in work groups and need to be replaced with another code. For example, the rocket emoji symbol commonly used for ‘to the moon’ in the crypto industry cannot be used, and instead, it should be replaced with the chili emoji symbol. It feels like we’re in a guerrilla warfare.”

Compliance is a double-edged sword. HashKey’s advantage lies in the fact that it can do things that many non-compliant crypto exchanges cannot, such as the inflow of compliant traditional capital, OTC, and RWA. However, its disadvantage is also the same: it cannot do many things that non-compliant exchanges can do and is subject to strict limitations. The problem is that many old businesses have been proven over time to be genuine market demands, whereas whether the new compliant direction represents a real demand, and how much profit potential such demand has, still requires more time to prove.

“The market has not yet expanded, and many players are blocked.”

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

Another pressure in reality for HashKey is that it has not truly risen yet, while strong players in other fields have already arrived on this not-so-wide battlefield. These include competitors from Hong Kong’s local crypto businesses such as OSL and Futu; international competitors like Coinbase, Kraken, and Binance; as well as emerging competitors in localized public chains such as Ant L2 - Jovay.

HashKey Group has a relatively large footprint, with its business modules covering exchanges (HashKey Exchange and HashKey Global), investment (HashKey Capital), over-the-counter 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 stores are commonly found in shopping malls, office buildings, or street shops

In terms of exchange operations, both HashKey Exchange and HashKey Global face fierce competition.

Unlike the Hong Kong station, HashKey Global’s competitors are much broader. For example, in the European market, it faces competition from cryptocurrency giants such as Coinbase, Kraken, Binance, Bitget, OKX, as well as local exchanges. Its competitors have already established stable and highly profitable territories. How HashKey can break through the encirclement through market-oriented methods is a challenge.

The competitors of HashKey Exchange in Hong Kong are currently OSL and Futu. These two companies themselves represent major players in the field, not only with rich experience in new finance but also with strong capabilities.

Potential competitor Futu has over 20 million users globally. Futu Securities is the largest retail brokerage in Hong Kong, with its Hong Kong users accounting for over 40% of the local adult population. It has accelerated its pace of entering the Hong Kong market and has developed its own cryptocurrency trading system. On May 7, Futu Securities International (Hong Kong) Limited announced the official launch of Bitcoin, Ethereum, and USDT deposit services.

The competitor OSL is backed by the “new first-tier giant” Bitget in the crypto industry, has ample funds, a complete ecosystem, and has become the first BTC stock on the Hong Kong stock market due to its choice to list there. In the past year, OSL’s stock price has risen by 91%, with a market capitalization of 8 billion HKD. In contrast, HSK’s token price has fallen by 85% over the past six months, with a market capitalization of 47 million USD and an FDV of 360 million USD.

However, a person familiar with the matter revealed that HashKey has been promoting VC financing and has also been actively promoting the listing of Hong Kong stocks, and if this move is passed, it may bring sufficient financial support to HashKey.

In addition to the exchange business, HashKey Chain is also facing competition from players in the same field in the public chain business. Ant Group’s L2 Jovay officially announced its launch in May, and its product manager has indicated to me that the mainnet is expected to go live in the third quarter of this year. As a leading financial technology giant in Asia, Ant Group’s strength in the new financial industry is second to none. Both Jovay and HashKey Chain regard RWA and Hong Kong as important development directions, and they may form 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 yet to establish competitiveness. With many giants “snatching” in such a scale, HashKey’s future has become even more elusive.

What problems did Hong Kong encounter behind HashKey?

“The thunder is loud, but the rain is light.” This is the sentiment of many Web3 practitioners when evaluating 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, there was only $529 million, which is often just the scale of net inflow of the U.S. spot BTC ETF in one day; after the approval of the U.S. Ethereum spot ETF, there was a total net inflow of $2.9 billion; after the approval of the Hong Kong Ethereum spot ETF, there was only a total net inflow of $58.44 million, similarly, the total net inflow in Hong Kong is often less than the net inflow of the U.S. Ethereum spot ETF in one day.

Many times, the policy rollout in Hong Kong is often earlier than that in the United States, such as the Ethereum spot ETF, the stablecoin policy, and the Ethereum staking policy. However, it’s like getting up early but arriving late.

Comparing the cryptocurrency markets of South Korea and Dubai, Hong Kong’s crypto ecosystem has also shown signs of fatigue. Retail users in South Korea are very active, making its crypto ecosystem exceptionally vibrant. Many Web3 project entrepreneurs hope to target South Korea as an important market while Dubai’s open policies have allowed it to capture the offshore center, with numerous exchanges and OTC players choosing to channel funds into Dubai rather than Hong Kong.

“The first year of the Hong Kong Crypto Summit was very lively, but the second and third years were much quieter,” said an industry professional. “Over the past three years, Hong Kong has slowly lost the confidence in the cryptocurrency market.”

This may also explain part of the reason why Hong Kong’s first concept coin HSK has experienced a big dump, as people’s belief in whether Hong Kong can become a global Web3 center has been shaken.

The United States has nearly $50 billion in net inflows for BTC spot ETFs. What does Hong Kong have? The United States has Coinbase, Europe has Kraken, and Dubai has top cryptocurrency companies like Binance and Bybit. What does Hong Kong have? South Korea firmly holds the active local retail market, and Dubai tightly grips the offshore center market. What has Hong Kong successfully captured? These questions seem to remain unanswered by Hong Kong’s crypto ecosystem and its leading enterprises.