HashKey’s Market Launch in Hong Kong Faces Challenges Amid Crypto Uncertainties

HashKey

HashKey Holdings made its trading debut in Hong Kong on Wednesday, initially experiencing a surge followed by a quick decline, as investors navigated a volatile cryptocurrency landscape. Despite generating substantial interest, the company struggled to maintain momentum.

Key Takeaways

HashKey Holdings began trading in Hong Kong, briefly rising about 6% before retreating below its IPO price.
The company raised approximately $206 million, marking it as the first cryptocurrency firm to be publicly listed in Hong Kong.
Institutional interest was significant, with the offering being oversubscribed multiple times.
HashKey aims to invest its IPO funds in technology and market expansion despite current losses.
The landscape in Hong Kong contrasts with mainland China's stringent regulations on cryptocurrency.

HashKey Debuts in Hong Kong Amid Market Volatility

HashKey Holdings launched its trading on Wednesday in Hong Kong with an initial surge, which quickly diminished as investors weighed the company’s long-term vision against the shaky crypto environment.

In the early trading session, shares rose by around 6%, but most of this increase was surrendered, with prices drifting down slightly below the initial public offering (IPO) price of HK$6.68 later in the morning.

This listing followed an offering that successfully raised roughly $206 million, establishing HashKey as the first cryptocurrency firm to go public in Hong Kong.

Established in 2018, HashKey operates the largest licensed cryptocurrency exchange in the city and also offers services in brokerage, tokenization, and asset management.

Strong demand was evident, with filings revealing that the institutional portion of the offering attracted subscriptions that were about 5.5 times the shares available, while the retail segment was oversubscribed nearly 394 times.

Strong Backing from Notable Investors Amid Bitcoin Fluctuations

Investors showed interest in the deal through cornerstone allocations involving prominent firms such as Fidelity, UBS, CDH Investments, and Cithara Fund. JPMorgan and Guotai Haitong served as joint bookrunners for the offering.

This market debut took place against a backdrop of significant fluctuations in crypto prices. For instance, Bitcoin experienced a sharp decline of up to 36% within a month after reaching an all-time high of over $126,000 in early October.

Xiao Feng, the chairman and CEO of HashKey, expressed a positive outlook for digital assets despite the ongoing price volatility. “My confidence is only growing stronger and I am more optimistic than 10 years ago due to increased regulation and compliance that will foster industry growth,” he shared.

Contrasting Approaches: Beijing's Restrictions vs. Hong Kong's Embrace

While mainland China has tightened controls on digital assets following a ban on cryptocurrency trading in 2021, Hong Kong has taken a different stance by promoting policies supportive of digital assets.

Xiao noted that the measures taken by mainland China target pyramid schemes and fraud linked to stablecoins, emphasizing that Hong Kong's regulatory environment is distinct.

“Hong Kong actively encourages digital asset policies, and we are reaping the benefits of that,” he stated. “We must firmly uphold the principle of ‘one country’ while wisely leveraging the advantages of ‘two systems.’”

Allocation of IPO Funds for Growth and Development

Currently, HashKey is operating at a loss, with Xiao indicating a focus on improving cash flow in the short term while continuing to invest as the sector evolves. The prospectus outlined plans to use proceeds from the IPO for enhancing technology infrastructure, expanding the market, forming partnerships, and bolstering operational and risk management.

HashKey obtained one of the earliest licenses under Hong Kong's 2022 digital asset framework, with research referenced in its filings indicating that HashKey accounts for over 75% of the city's onshore digital asset trading volume.

In addition to spot trading, HashKey offers on-chain services such as staking, tokenization, and custody, managing billions in client assets through funds and structured products that cater to institutional and high-net-worth investors.