After four consecutive years of losses and a sluggish performance, HashKey is going public against the trend. Will the capital market buy into it?

Original article by Odaily Planet Daily ( @OdailyChina )

Author｜Golem ( @web3_golem )

On December 1, Hong Kong Stock Exchange filings revealed that HashKey, a licensed cryptocurrency exchange in Hong Kong, has passed its listing hearing, taking a crucial step towards its IPO. Its IPO is jointly sponsored by institutions including JPMorgan Chase and Guotai Junan International. After listing, the company's controlling shareholder will include Mr. Lu and related investment entities, and the shareholder lineup also includes well-known institutions such as Gaorong Capital, Fidelity Investments, and Meitu.

HashKey's listing is seen as an important signal of the crypto industry's compliance process, and is expected to attract more entrepreneurs to Hong Kong's digital asset ecosystem.

However, HashKey's own operating performance is far from optimistic: its prospectus reveals that the company suffered losses for four consecutive years from 2022 to 2025; as of June 2025, it had only about 138,000 registered users; the platform's weekly visits were only 2,203, less than one ten-thousandth of Binance's; and its daily trading volume remained at the million-dollar level. Furthermore, its platform token, HSK, has fallen by more than 85% from its peak, and investor dissatisfaction is pervasive in the community.

With continuous financial losses, sluggish user growth, and a shrinking platform token market value, what kind of valuation will the capital market give HashKey?

Unprofitable Exchanges: HashKey's Scale Dilemma

Exchanges are often referred to as the most profitable "water sellers" in the crypto market, but HashKey is clearly an exception. Despite its seemingly substantial gross profit—HK$125.5 million, HK$195.4 million, HK$532.5 million, and HK$184.5 million respectively from 2022 to the first half of 2025— the company has been mired in losses for four consecutive years, with net losses of HK$585 million, HK$580 million, HK$1.189 billion, and HK$506.7 million respectively during the same period.

HashKey Financial Core Indicators

The main reason for HashKey's continuous losses is the huge expenditures outside of its direct exchange business, with "research and development expenses" and "general and administrative expenses" being the largest expenditures from 2022 to 2025. In 2024 alone, HashKey's R&D expenses exceeded HK$556 million and administrative expenses exceeded HK$632 million, totaling nearly HK$1.2 billion, far exceeding its revenue of HK$720 million that year.

The problem of redundant staff is prominent, and the transformation of results is not obvious.

In fact, HashKey's R&D team is extremely large.

The prospectus mentions that Wanxiang Blockchain provides technical development services to HashKey— "The number of people providing technical development services to the Group will increase by about 40% from about 210 in 2024 to about 300 in 2025," and states that "the R&D team will be further strengthened in the next three to five years, and the team is expected to consist of 70 employees who are proficient in blockchain technologies such as zero-knowledge proofs."

However, despite such a large number of technical personnel, the product has not won full user recognition. On social media, users frequently complain about "poor experience", "slow bug fixes", and "repeated delays in product features". Putting aside subjective evaluations, the excessive investment in technology has not brought HashKey higher returns. Its heavily invested Ethereum L2, HashKey Chain, which occupies the main development resources, has also performed poorly.

According to DeFiLlama data, HashKey Chain's TVL is only $1.12 million, its 24-hour transaction fee revenue is $11, and it has only 6 ecosystem protocols listed. Meanwhile, according to L2beat data, HashKey Chain's TPS in the past day was 0.07, with a maximum TPS of 1.17. In comparison, Arbitrum's TPS in the past day was 31.95, with a maximum TPS of 68.82.

With dismal data, this L2 blockchain, marketed for its compliance and RWA channels, is nothing more than a "ghost town on the blockchain." This inevitably raises questions: Where have the enormous R&D expenditures accumulated over the years gone? And were they even necessary?

Compliance expenses exceeded HK$130 million in the first half of 2025.

Compliance expenses constitute a significant portion of HashKey's operating costs. Although HashKey is still considered a mid-sized trading platform in terms of trading volume and user base, its market recognition is often comparable to top-tier platforms thanks to its Hong Kong compliance license, and it has even been dubbed "the Coinbase of the East." However, compliance comes at a cost—HashKey invests heavily in management, operations, and compliance to meet Hong Kong's stringent regulatory requirements.

According to the prospectus, in the first half of 2025, HashKey's compliance-related expenses amounted to approximately HK$130 million, covering compliance personnel, professional service fees, insurance, and other ancillary expenses.

For exchanges, compliance has always been a key development direction. Leading exchanges often invest more heavily in compliance, which brings multiple benefits: reducing legal risks, expanding channels for institutional and individual users, gaining more open publicity space, and enhancing corporate image.

If an exchange can obtain a license first or exclusively in a certain market, the corresponding compliance costs become particularly worthwhile. HashKey recognized this early on and officially obtained a license from the Hong Kong Securities and Futures Commission (SFC) in September 2022, becoming one of only two licensed virtual asset trading platforms in the country (the other being OSL).

However, as Hong Kong's cryptocurrency regulatory policies become clearer, the scarcity of compliance licenses has gradually decreased. As of recently, the number of trading platforms approved by the SFC has increased to 11, with the exception of OSL and HashKey, the remaining 9 were approved between 2024 and 2025.

In the future, Hong Kong is likely to see more compliant exchanges emerge, meaning that licenses themselves will no longer constitute a sufficiently wide moat, but will gradually become a basic requirement for industry entry. In the long run, competition between platforms will focus more on product capabilities and user experience.

In other words, the marginal benefit of this "necessary expenditure" for HashKey may decrease over time. If the cost structure cannot be effectively optimized, the high compliance expenses may become a financial burden in the future.

From an investment perspective, cash flow and profitability are often the core concerns of stock market investors. HashKey has been operating at a loss for four consecutive years, and the returns from its key expenditures are gradually weakening. Whether it can win the confidence of Hong Kong stock market investors after its listing remains to be seen.

HSK plunges over 86%; will the "platform coin dilemma" be repeated in HashKey's Hong Kong stock listing?

Despite the upcoming influx of new Hong Kong stock investors into HashKey, holders of its platform token HSK are already facing significant pressure.

Last week marked the one-year anniversary of HSK's launch; however, CoinGecko data shows that the token has fallen by more than 63% since its issuance, with a drop of over 86% from its peak. This means that investors who purchased HSK at any point in the past year and have held it until now are generally in a loss-making situation.

The prospectus defines HSK as an ecosystem utility token that can be used to pay transaction and computing fees on the HashKey Chain and as an incentive for employees, users, partners, etc., while explicitly stating that it does not have a financing function.

HashKey has invested significant resources in distributing HSK, with related costs of HK$9.9 million, HK$70.8 million, and HK$176.7 million in 2022, 2023, and 2024, respectively. However, actual HSK usage is not active: the usage rate was only 1.71% for the whole of 2024, and further decreased to 0.49% in the first half of 2025. This not only affected the overall financial performance but also reflects the limited ecosystem activity of HashKey Chain at present.

The prospectus attributes the decline in HSK prices primarily to changes in market sentiment and investor expectations. HashKey had pledged to use 20% of its net profit to repurchase and destroy HSK, but has not yet executed any repurchases, explaining that "the repurchase conditions have not yet been met." However, HashKey has not publicly provided details regarding the specific repurchase conditions, execution methods, and scale. This has raised market concerns about the enforceability of its repurchase commitment.

Typically, crypto exchanges gradually reduce their association with platform tokens when expanding into traditional capital markets. While HashKey hasn't explicitly severed its ties with HSK, the token's persistently low price suggests that HSK may not be central to its future strategic plan.

To some extent, early supporters of HSK bore some of the costs in the development of HashKey.

Hong Kong stock investors may not be familiar with this background, but HSK's performance can still serve as a window for observation: although platform tokens and company stocks belong to different asset classes, their value support and market confidence mechanisms are still worth careful consideration by every potential investor.

What is the estimated value of a HashKey?

When examining HashKey's IPO prospects, the challenges it faces are quite significant: product experience needs improvement, transaction depth is insufficient, its on-chain ecosystem lacks competitiveness, and it faces continuous pressure to generate profits. Even its compliance narrative, which previously differentiated it from the market, is losing its luster due to the increasing prevalence of licenses. Against this backdrop, how HashKey should value itself in its IPO attempt at this time has become a core focus of market attention.

Back in October of last year, Reuters reported that HashKey was preparing for an IPO, aiming to raise up to $500 million. However, according to sources, the fundraising process has not been smooth. Today, a crypto KOL analyzed that HashKey's valuation may fall into the $2 billion range. Although this figure is far lower than Coinbase's valuation of nearly $50 billion when it went public in 2021, and also lower than Upbit's market capitalization of approximately $10.3 billion, if it does come to fruition, it can still be considered a mid-cap stock worth watching in the Hong Kong stock market.

While HashKey's IPO story may seem less than optimistic from a fundamental perspective—including product strength, profit model, and core advantages— it still holds symbolic significance when considered within the current macroeconomic environment: the crypto market as a whole is under pressure, regulations are tightening, and new capital is scarce. A successful Hong Kong listing for HashKey could not only provide the industry with a rare compliance exit and liquidity pathway but also offer traditional capital markets a close-up view of the crypto ecosystem. In this sense, its listing may transcend mere corporate financing and carry a signal of potential breakthrough.