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

Author: Zhang Feng

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

We combine the information disclosed in HashKey's prospectus to analyze in depth the dual regulatory environment it faces—it must comply with the specific rules of the Hong Kong Securities and Futures Commission (SFC) as a licensed virtual asset trading platform, and also meet the general requirements of the Hong Kong Stock Exchange (HKEX) as an issuer according to the Listing Rules. At the same time, we will further compare its listing process with that of traditional financial institutions (such as brokerages and banks), focusing on the legal classification challenges of virtual assets in accounting and disclosure, and analyze the substantial impact of the “licensed status” qualification on the listing review.

1. HashKey Business Overview and Regulatory Landscape

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

First, digital asset trading facilitation services, providing trading, custody, and related services for virtual assets through licensed platforms.

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

Third, digital asset management services, providing 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 details extensively the legal frameworks applicable in each of its major operating locations:

Hong Kong, as the headquarters and core operation center, 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, provides fund management and digital payment token (DPT) services through licensed companies, regulated by the Monetary Authority of Singapore (MAS), subject to the Securities and Futures Act (SFA) and the Payment Services Act (PS Act).

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 exchange service provider in Japan, registered as a VASP in Ireland and currently applying for authorization as a Crypto Asset Service Provider (CASP).

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

2. Analysis of the Listing Mechanism under the Dual Regulatory Framework

HashKey's path to listing in Hong Kong is essentially about finding a convergence point between the regulatory framework for virtual asset service providers by the Securities and Futures Commission (SFC) and the listing regulatory framework for issuers by the Hong Kong Stock Exchange (HKEX).

(1) Ongoing Compliance Obligations of Licensed VATPs (SFC Dimension)

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

Financial resource requirements. A minimum issued capital of HKD 5 million must be maintained, along with a minimum liquid capital requirement of HKD 3 million or as calculated by 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 “affiliated entity” established in Hong Kong, strictly implementing 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. A comprehensive risk management, compliance, information technology, and anti-money laundering/counter-terrorist financing (AML/CFT) system must be established, and qualified responsible officers (ROs) and key function supervisors (MICs) should be appointed.

Code of Conduct. Must comply with documents such as the “Guidelines for Virtual Asset Trading Platform Operators” 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 operating subsidiaries will be subject to continuous direct supervision by the Securities Regulatory Commission. Any significant violations may lead to the suspension or revocation of licenses, fundamentally undermining their listing qualifications and ability to operate continuously.

(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 emphasized.

Business Sustainability. Assess its ability to operate continuously in a stringent and rapidly changing regulatory environment. This includes analyzing the stability of its licenses, the ability to comply with new regulations (such as the upcoming Hong Kong over-the-counter derivatives reporting regulations to be implemented in 2025), and its compliance record across different jurisdictions.

Adequacy of Risk Disclosure. The prospectus must provide a detailed disclosure of the specific risks associated with digital asset businesses, such as extreme volatility in virtual asset prices, cybersecurity risks, custody risks, uncertainty in regulatory policies, and potential risks of technological obsolescence. The depth and breadth of the disclosures will far exceed those of traditional enterprises.

Related Transactions and Corporate Governance. Due to the involvement of multiple licensed entities within the group and the complex flow of funds and customer assets, the Stock Exchange will strictly review the fairness, necessity, and compliance of its related 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 the accounting treatment related to virtual assets, asset valuation, and revenue recognition methods (such as transaction fees, staking rewards, and asset management fees) will become the focus of financial audits.

(3) The Interweaving and Coordination of the Dual Frameworks

Dual regulation is not a separation. In the review process, the Exchange will highly rely on and respect the judgment of the SFC in its area of expertise (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 previous inspection results, disciplinary records, or guidelines issued by the Securities and Futures Commission will become an important reference for the Hong Kong Stock Exchange's review.

For the fundamental issue of the legality of virtual asset business models, 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 “Licensing compliance is the foundation, listing disclosure is the deepening”. The former is led by the SFC, ensuring the legal and stable operation of the business; the latter is led by the HKEX, ensuring the transparency and fairness of information in the capital market. Together, they form a dual line of defense for investor protection.

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

Compared to the listing of traditional financial institutions such as brokers and banks, HashKey's path is similar in terms of the procedural framework, but it faces unique challenges in the review process.

(1) Similarities

First, the core regulatory logic is consistent; it focuses on protecting investors and maintaining market integrity as the core objectives. Second, comprehensive review requirements; all must meet the comprehensive examination of historical records, corporate governance, financial status, related-party transactions, risk disclosure, and other aspects. Third, licensed operation as a prerequisite; traditional brokers must be licensed, and HashKey, as a VATP, must also be licensed; the licensed status is an important prerequisite for business legality and review.

(2) Significant Differences

First, 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 phase of rapid construction and iteration (with multiple new guidelines introduced consecutively in 2023, 2024, and 2025), leading to greater policy uncertainty and significantly increasing the compliance costs and future uncertainties for issuers.

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

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

Fourth, the challenges of valuation and profit models. Traditional financial institutions have relatively mature models for valuation (such as price-to-earnings ratio, price-to-book ratio, assets under management multiples). The valuation of digital asset service companies is more complex, as their value is closely related to trading volume, the scale of custodial assets, market volatility, and regulatory barriers to entry, with profits potentially affected by dramatic fluctuations in token prices, making future cash flow predictions even more difficult.

4. The Core Impact of “Licensing Status” on Listing Review

The “licensed status” is the key to understanding HashKey's 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 legitimacy and sustainability of its business model will face fatal skepticism, making it extremely difficult to pass the review. For HashKey, its comprehensive licensing status (especially in the core market of Hong Kong) is the strongest evidence proving its business legality, operational compliance, and long-term survival capability, constituting a core competitive advantage and an important part of its value proposition for the listing application.

Embodiment of High Entry Barriers. The “Industry Overview” section of the prospectus emphasizes that licenses and compliance are the “significant entry barriers” in the digital asset trading service market. HashKey's licensed status is a direct reflection of its ability to overcome this barrier 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 a thorough examination of the “quality” of its licensing status during the review.

Compliance History. Are there any records of being investigated, penalized, warned, or subjected to additional conditions by the SFC, MAS, or other regulatory bodies? The prospectus must disclose this truthfully. A clean compliance history is a significant plus.

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

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

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

(3) The correlation between licensing status and valuation

In valuation discussions, the regulatory premium and trust premium brought by licensed status will be considered by the market. Being licensed means being able to legally serve a wider range of clients (especially institutional investors and retail clients), providing greater business growth potential; it also means lower regulatory uncertainty risks and stronger client trust, which may lead to a higher valuation multiple than unlicensed peers.

HashKey's IPO journey outlines a unique listing path that carefully balances innovation and regulation, tradition and the frontier. The key to its success lies in successfully constructing and demonstrating a robust “dual compliance” framework: on one hand, as a virtual asset service provider, it has deeply embedded itself within 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 actively embraces the market regulatory system centered on the Hong Kong Stock Exchange's Listing Rules, which is based on information disclosure, addressing investors' cognitive risks with transparency and detailed disclosures.

The uniqueness of this path lies in the fact that it does not simply follow existing templates, but explores a field 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 of compliance, while “listing” represents a higher stage of transparency and standardization. Although licensing qualifications are not an absolute legal prerequisite for listing, they have 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 wish 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 exceed minimum requirements, and be prepared to disclose business and risk information to the highest standards. Their listing process and subsequent performance will not only concern the fate of the companies themselves but also set benchmarks for the entire industry, influence the subsequent evolution of regulatory policies, and provide valuable references for other markets globally.