HashKey IPO: The Specificity of the Listing Path and Regulatory Framework

Written by: Zhang Feng

With the rapid development of the global digital asset industry, compliance and institutionalization have become the main themes of the industry's evolution. Against this backdrop, HashKey, a leading digital asset financial services group in Asia, has passed the Hong Kong Stock Exchange hearing and will become the “first Hong Kong cryptocurrency stock.” Its prospectus reveals a unique path to explore capital market connections under a strict regulatory framework. HashKey's listing is not only a milestone for the company itself but can also be seen as a key case for observing the integration process between the digital asset industry and the traditional financial regulatory system.

We combine the information disclosed in HashKey's prospectus to analyze in depth the dual regulatory environment it faces - having to comply with the specialized rules of the Hong Kong Securities and Futures Commission (SFC) as a licensed virtual asset trading platform, while also meeting the general requirements of the Listing Rules of The Stock Exchange of Hong Kong Limited (the Exchange) in its capacity as an issuer. We will also further compare its listing process with the similarities and differences of traditional financial enterprises (such as brokers and banks), focusing on the legal classification challenges of virtual assets in accounting and disclosure, and analyzing the substantial impact of the key qualification of “licensed status” on the listing review.

1. HashKey Business Profile and Regulatory Landscape

According to the prospectus, HashKey Group is positioned as “the largest digital asset management service provider in Asia” and “the largest digital asset on-chain service provider in Asia.” Its business landscape spans three core sectors:

First is the digital asset trading facilitation service, which provides trading, custody, and related services for virtual assets through licensed platforms.

Second is the on-chain services for digital assets, including staking and asset tokenization services.

Thirdly, digital asset management services provide professional digital asset portfolio management for institutions and qualified investors.

Supporting this global business layout is an extremely complex and dynamically evolving regulatory network. The prospectus elaborates in great detail on the legal frameworks applicable in each of the major operating locations:

As the headquarters and core operating location, HashKey's business is primarily regulated by the Securities and Futures Ordinance (SFO) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). Its Hong Kong entity holds licenses for regulated activities issued by the Securities and Futures Commission for Type 1 (dealing in securities), Type 7 (providing automated trading services), and Type 9 (asset management), and operates a virtual asset trading platform (VATP) under AMLO.

Singapore, through licensed companies, provides fund management and digital payment token (DPT) services, regulated by the Monetary Authority of Singapore (MAS), and is governed by the Securities and Futures Act (SFA) and the Payment Services Act (PS Act).

In other jurisdictions, holding a digital asset business (Class F) license in Bermuda, a virtual asset service provider (VASP) license in Dubai, UAE, registered as a cryptocurrency trading service provider in Japan, registered as a VASP in Ireland and currently applying for a crypto asset service provider (CASP) authorization.

This multi-jurisdictional licensed status reflects its strength and commitment to compliance, and requires its listing process to simultaneously meet the demands of multiple regulatory systems, with Hong Kong's dual regulation being the most central and typical.

II. Analysis of the Listing Mechanism under Dual Regulatory Framework

HashKey's path to listing in Hong Kong essentially seeks a meeting point between the Securities and Futures Commission (SFC)'s regulatory framework for virtual asset service providers and the Hong Kong Stock Exchange (HKEX)'s issuer listing regulatory framework.

(1) Ongoing compliance obligations of licensed VATP (SFC dimension)

As a licensed VATP, HashKey (represented by entities such as Hash Blockchain Limited) must continuously comply with a series of stringent regulations, which constitute the baseline for its business operations and the starting point for listing reviews:

Financial resource requirements. A minimum of HKD 5 million in issued share capital must be maintained, along with a current capital requirement of at least HKD 3 million or calculated according to a complex formula. Additionally, sufficient liquid assets in Hong Kong must be held to cover 12 months of operating expenses.

Custody of client assets. Client assets must be held in trust through a wholly-owned subsidiary “associated entity” registered in Hong Kong, strictly enforcing asset segregation. At least 98% of client virtual assets must be stored in cold wallets, and insurance or compensation arrangements must be established.

Internal monitoring and governance. It is necessary to establish a comprehensive risk management, compliance, information technology, and anti-money laundering/combating the financing of terrorism (AML/CFT) system, and appoint qualified responsible personnel (RO) and core function supervisors (MIC).

Code of conduct. Must comply with documents such as the “Guidelines for Operators of Virtual Asset Trading Platforms” to ensure that business operations are honest and fair, fully disclose risks, and avoid conflicts of interest.

These ongoing obligations mean that the compliance status of HashKey's listing entity and its key operational subsidiaries will be subject to continuous direct oversight by the securities regulatory authority. Any significant violations may lead to the suspension or revocation of licenses, fundamentally undermining their listing eligibility and ongoing business capabilities.

(2) Disclosure and Compliance Review of the Listing Applicant (Exchange Dimension)

The Stock Exchange's review of issuers focuses on investor protection and market integrity. For issuers in special industries like HashKey, the review will be particularly focused.

Business sustainability. Assessing its ability to operate continuously in a stringent and rapidly changing regulatory environment. This includes analyzing the stability of its licenses, the ability to respond to new regulations (such as the upcoming OTC derivatives reporting regulations in Hong Kong to be implemented in 2025), and its compliance record in different jurisdictions.

Adequacy of risk disclosure. The prospectus must thoroughly disclose the specific risks associated with digital asset operations, such as the extreme volatility of virtual asset prices, cybersecurity risks, custody risks, regulatory policy uncertainties, and potential risks of technological obsolescence. The depth and breadth of disclosure will far exceed that of traditional enterprises.

Related party transactions and corporate governance. Due to the involvement of multiple licensed entities and the complex flow of funds and customer assets within the group, the Stock Exchange will strictly review the fairness, necessity, and compliance of its related party transaction arrangements to ensure they meet the requirements of the Listing Rules and the Securities and Futures Commission.

Presentation of financial condition. The reasonableness and consistency of accounting treatments related to virtual assets, asset valuations, and revenue recognition methods (such as transaction fees, staking rewards, and asset management fees) will be the focus of financial audits.

(3) The Interweaving and Collaboration of the Dual Framework

Dual regulation is not a disconnection. In the review process, the Stock Exchange will heavily rely on and respect the judgment of the Securities and Futures Commission in its professional field (i.e., regulation of virtual asset services). For example:

The licensed status itself is a key positive factor for the Stock Exchange's assessment of the issuer's compliance history and reputation.

The past inspection results, disciplinary records, or guidelines issued by the Securities and Futures Commission will serve as an important reference for the Hong Kong Stock Exchange's review.

On the fundamental issue of the legality of the business model involving virtual assets, the Stock Exchange is likely to seek or adopt the views of the Securities and Futures Commission.

Therefore, HashKey's listing mechanism presents an overlapping model of “licensed compliance as the foundation, and listing disclosure as the deepening”. The former is led by the SFC, ensuring the legality and robustness of business operations; the latter is led by HKEX, ensuring the transparency and fairness of information in the capital market. Together, they form a dual defense for investor protection.

3. Comparative Analysis with the Listing Process of Traditional Financial Enterprises

Compared to traditional financial enterprises such as brokerages and banks going public, HashKey's path is similar in process framework, but faces unique challenges in the review.

(1) Similarities

First, the core regulatory logic is consistent, with the main objectives being to protect investors and maintain market integrity. Second, there are comprehensive review requirements, which must meet thorough examinations of historical records, corporate governance, financial conditions, related party transactions, and risk disclosures. Third, licensed operations are a prerequisite; traditional brokerages need to be licensed, and HashKey, as a VATP, also needs to be licensed. The licensed status is an important prerequisite for the legality of operations and reviews.

(2) Significant Differences

Firstly, the maturity and stability of the regulatory system: the regulatory framework of traditional finance (such as the SFO rules for brokerages) has developed over several decades and is relatively mature and stable. In contrast, the regulation of virtual assets (such as the SFC's VATP guidelines) is still in a rapid construction and iteration phase (with multiple new guidelines being introduced in 2023, 2024, and 2025), leading to higher policy uncertainty, which significantly increases the compliance costs for issuers and future uncertainties.

The second fundamental difference is the ambiguity in the legal characterization of assets and products. The legal attributes, accounting treatment, and transaction settlement rules for financial instruments such as stocks and bonds handled by traditional financial institutions are clearly defined. Whether virtual assets constitute “securities” or “financial products” depends on their specific economic substance, which creates a gray area. The prospectus also mentions that the nature of tokens may change over time; therefore, HashKey has chosen to apply for dual licenses under both the SFO and AMLO to cover the risks. This ambiguity in characterization directly affects how these assets are classified, measured, and disclosed in financial statements, as well as the legal characterization of related business income.

Thirdly, the specificity of the risk spectrum requires HashKey to disclose a series of unique risks that are rarely seen in traditional finance, such as: irreversible asset loss due to the loss or theft of private keys, protocol risks of the underlying blockchain network, smart contract vulnerability risks, stablecoin failure risks, and complex risks arising from interactions with decentralized finance (DeFi). These risks are highly technical and pose a challenge to the understanding of auditors and investors.

Fourth, there are challenges related to valuation and profit models. Traditional financial institutions have relatively mature models for valuation (such as price-to-earnings ratio, price-to-book ratio, and asset management scale multiples). In contrast, the valuation of digital asset service companies is more complex, as their value is closely related to trading volume, custodial asset scale, market volatility, and the height of regulatory entry barriers. Additionally, profitability may be significantly affected by the drastic fluctuations in token prices, making future cash flow predictions even more difficult.

4. The core impact of “licensed status” on the listing review.

The “licensed status” is the key to understanding the HashKey listing review, and its impact is comprehensive and decisive.

(1) As a prerequisite and core advantage

Not absolutely prerequisite, but essentially necessary. Theoretically, a non-licensed digital asset company can also apply for listing, but the legality and sustainability of its business model will face fatal questioning, making it very difficult to pass the review. For HashKey, its comprehensive licensed status (especially in its core market, Hong Kong) is the strongest evidence proving the legality of its business, compliance of operations, and long-term survival capability, forming a core competitiveness and an important part of its value proposition for its listing application.

The manifestation of high entry barriers. The “Industry Overview” section of the prospectus emphasizes that licenses and compliance are the “significant entry thresholds” in the digital asset trading service market. HashKey's licensed status is a direct reflection of its ability to overcome this threshold and possess a strong moat, which can enhance investor confidence in its market position and profitability sustainability.

(2) Licensing is a key focus of ongoing review.

The exchange will conduct an in-depth review of the 'quality' of its licensed status during the audit.

Compliance history. Is there any record of being investigated, punished, warned, or subjected to additional conditions by the SFC, MAS, or other regulatory agencies? The prospectus must disclose this truthfully. A clean compliance history is a significant advantage.

The continued validity of the license. The review will focus on the measures the company has taken to ensure the renewal of the license and respond to new regulations. For example, HashKey's MPI license in Singapore and the transition to CASP in Ireland both demonstrate its proactive ability to adapt to regulations.

The reliability of internal controls. The strict internal control systems (such as AML/CFT, cybersecurity, and client asset protection) arising from licensing requirements are an important basis for the stock exchange to assess the effectiveness of corporate governance and risk management.

Regulatory reliance risk. The audit will also focus on the company's degree of reliance on specific regulatory environments or individual licenses. HashKey's operations span multiple countries, which somewhat diversifies the risk of sudden policy changes in a single jurisdiction, and this is its advantage.

(3) The relationship between licensing status and valuation

In valuation discussions, the regulatory premium and trust premium brought by licensing status will be considered by the market. Licensing means the ability to legally serve a broader client base (especially institutional investors and retail investors), which allows for greater business growth potential; it also means lower regulatory uncertainty risk and stronger customer trust, thereby potentially achieving valuation multiples higher than those of unlicensed peers.

HashKey's IPO journey outlines a unique listing path that carefully balances innovation and regulation, tradition and the cutting edge. The key to its success lies in the effective construction and demonstration of a solid “dual compliance” framework: on one hand, as a virtual asset service provider, it is deeply embedded in the increasingly stringent functional regulatory system represented by the SFC, responding to business risks with multiple licenses and continuous compliance; on the other hand, as a listing applicant, it proactively embraces the market regulatory system centered around the Hong Kong Stock Exchange's “Listing Rules,” addressing investors' cognitive risks with transparent and detailed disclosures.

The uniqueness of this path lies in the fact that it does not simply follow existing templates, but explores areas where there are no fully mature precedents. It profoundly reveals that in the process of the digital asset industry moving towards the mainstream financial system, “licensing” is the starting point for compliance, while “listing” represents a higher stage of transparency and standardized development. Although having a license is not an absolute legal prerequisite for listing, it has become an indispensable “birth certificate” and “health certificate” for measuring the quality of enterprises and assessing investment risks.

The case of HashKey indicates that if digital asset companies want to enter mainstream capital markets in the future, they must elevate regulatory compliance to a strategic core position, establish internal control and governance systems that go beyond minimum requirements, and be prepared to disclose business and risk information to the highest standards. Its listing process and subsequent performance will not only relate to the fate of the company itself but will also set a benchmark for the entire industry, influence the subsequent evolution of regulatory policies, and provide valuable references for other global markets.