Author: 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. 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 the traditional financial regulatory system.

Combining the information disclosed in HashKey's prospectus, we will analyze the dual regulatory environment it faces—it must comply with the specialized rules of the Securities and Futures Commission (SFC) as a licensed virtual asset trading platform, while also meeting the general requirements of the Listing Rules of the Hong Kong Stock Exchange (HKEX) as an issuer. We will also further compare its listing process with that of traditional financial enterprises (such as brokerages and banks), focusing on the legal qualification challenges of virtual assets in accounting and disclosure, and analyze the substantial impact of the key qualification of "licensed status" on the listing review.

I. HashKey Business Profile and Regulatory Overview

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 a licensed platform.

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

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

Hong Kong serves as the headquarters and core operating location, where 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 SFC under Type 1 (dealing in securities), Type 7 (providing automated trading services), and Type 9 (asset management), and operates a licensed virtual asset trading platform (VATP) under AMLO.

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

Other jurisdictions include holding a digital asset business (Class F) license in Bermuda, a virtual asset service provider (VASP) license in Dubai, registration as a cryptocurrency trading service provider in Japan, and registration as a VASP in Ireland while applying for authorization as a crypto asset service provider (CASP).

This multi-jurisdictional licensing status reflects both its strength and compliance commitment, and it necessitates that its listing process simultaneously meets the requirements of multiple regulatory systems, with Hong Kong's dual regulation being the most central and typical.

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

HashKey's path to listing in Hong Kong essentially seeks a convergence point between the SFC's regulatory framework for virtual asset service providers and the HKEX's regulatory framework for issuer listings.

(A) 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 stringent regulations, which constitute the baseline for its business operations and the starting point for the listing review:

Financial resource requirements. It must maintain a minimum issued share capital of HKD 5 million and at least HKD 3 million or a "liquid capital" requirement calculated according to a complex formula. Additionally, it must hold sufficient liquid assets in Hong Kong 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" 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 controls 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 heads (MICs) must be appointed.

Code of conduct. Compliance with documents such as the "Guidelines for Virtual Asset Trading Platform Operators" is required to ensure that business operations are honest and fair, risks are fully disclosed, and conflicts of interest are avoided.

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 SFC. Any significant violations could lead to the suspension or revocation of licenses, fundamentally undermining its listing qualifications and ongoing operational capabilities.

(B) Disclosure and Compliance Review of Listing Applicants (HKEX Dimension)

The HKEX's review of issuers focuses on investor protection and market integrity. For special industry issuers like HashKey, the review will emphasize:

Business sustainability. Assessing its ability to continue operating in a strict and rapidly changing regulatory environment. This includes analyzing the stability of its licenses, its ability to respond to new regulations (such as the new reporting regulations for over-the-counter derivatives in Hong Kong set to take effect in 2025), and its compliance record in different jurisdictions.

Adequacy of risk disclosure. The prospectus must thoroughly disclose unique risks associated with the digital asset business, such as extreme volatility in 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 within the group and the complex flow of funds and client assets, the HKEX will rigorously review the fairness, necessity, and compliance of its related party transaction arrangements to ensure compliance with the Listing Rules and SFC requirements.

Presentation of financial condition. The reasonableness and consistency of accounting treatment, asset valuation, and revenue recognition methods (such as transaction fees, staking income, and asset management fees) related to virtual assets will be key focuses of the financial review.

(C) Interweaving and Coordination of the Dual Framework

The dual regulation is not fragmented. In the review process, the HKEX will heavily rely on and respect the SFC's judgments in its professional field (i.e., virtual asset service regulation). For example:

• The licensing status itself is a key positive factor for the HKEX in assessing the issuer's compliance history and reputation.
• Past inspection results, disciplinary records, or guidance issued by the SFC will serve as important references for the HKEX's review.
• For fundamental issues regarding the legality of the virtual asset business model, the HKEX is likely to seek or adopt the SFC's views.

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

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

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

(A) Similarities

First, the core regulatory logic is consistent, with both aiming to protect investors and maintain market integrity. Second, there are comprehensive review requirements, both needing to meet thorough examinations of historical records, corporate governance, financial condition, related party transactions, and risk disclosures. Third, licensed operation is a prerequisite; traditional brokerages require licenses, and HashKey, as a VATP, also requires licensing, making licensing status a crucial prerequisite for business legality and review.

(B) Significant Differences

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

Second, the legal qualification of assets and products is ambiguous, which is the most fundamental difference. Traditional financial institutions deal with financial instruments like stocks and bonds, whose legal attributes, accounting treatments, and transaction settlement rules are well-defined. Whether virtual assets constitute "securities" or "financial products" depends on their specific economic substance, existing in a gray area. The prospectus also mentions that the nature of tokens may change over time, which is why HashKey chooses to apply for dual licenses under both the SFO and AMLO to cover 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.

Third, the uniqueness of the risk spectrum, HashKey must disclose a series of unique risks rarely seen in traditional finance, such as irreversible asset loss due to lost or stolen private keys, protocol risks of underlying blockchain networks, smart contract vulnerability risks, stablecoin failure risks, and complex risks arising from interactions with decentralized finance (DeFi). These highly technical risks pose challenges to the understanding capabilities of reviewers and investors.

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

IV. The Core Impact of "Licensed Status" on the Listing Review

"Licensed status" is the key to understanding HashKey's listing review, and its impact is comprehensive and decisive.

(A) As a Precondition and Core Advantage

Not an absolute prerequisite, but substantively necessary. Theoretically, an unlicensed digital asset company could also apply for listing, but its business model's legality and sustainability would face fatal doubts, 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 viability, constituting a core competitive advantage and an important part of its value proposition for the listing application.

Reflection of high entry barriers. The "Industry Overview" section of the prospectus emphasizes that licensing and compliance are "significant entry barriers" in the digital asset trading service market. HashKey's licensed status is a direct reflection of its ability to cross this barrier and possess a strong competitive moat, enhancing investor confidence in its market position and profitability sustainability.

(B) Licensing as a Continuous Review Focus

In its review, the HKEX will delve into the "quality" of its licensed status:

Compliance History. Are there any records of investigations, penalties, warnings, or additional conditions imposed by the SFC, MAS, or other regulatory bodies? The prospectus must disclose this truthfully. A clean compliance history is a significant advantage.

Continuing Validity of Licenses. The review 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 demonstrate its proactive ability to adapt to regulation.

Reliability of Internal Controls. The strict internal control systems (such as AML/CFT, cybersecurity, and client asset protection) prompted by licensing requirements are important bases for the HKEX to assess the effectiveness of its corporate governance and risk management.

Regulatory Dependency Risk. The review will also consider the company's level of dependence on specific regulatory environments or individual licenses. HashKey's operations across multiple countries somewhat mitigate the risk of sudden policy changes in a single jurisdiction, which is an advantage.

(C) The Relationship Between Licensed Status and Valuation

In valuation discussions, the regulatory premium and trust premium brought by licensed status will be considered by the market. Licensing means the ability to legally serve a broader client base (especially institutional investors and retail clients), providing greater business growth potential; it also implies lower regulatory uncertainty risks and stronger client trust, potentially leading to higher valuation multiples compared to unlicensed peers.

HashKey's IPO journey outlines a unique listing path that carefully balances innovation and regulation, tradition and 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 is deeply embedded in an increasingly stringent functional regulatory system represented by the SFC, responding to business risks with multiple licenses and ongoing compliance; on the other hand, as a listing applicant, it actively embraces a market regulatory system centered on the HKEX's Listing Rules, addressing investor perception 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 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 standardized development. Although licensing qualifications are not an absolute legal prerequisite for listing, they have become an indispensable "birth certificate" and "health certificate" for measuring corporate quality and assessing investment risks.

The case of HashKey indicates that if future digital asset companies wish to enter mainstream capital markets, 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. Its listing process and subsequent performance will not only concern 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.

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