HashKey reaches ‘unicorn’ valuation after raising US$100 million

HashKey Group, the company behind one of Hong Kong’s two cryptocurrency exchanges approved to serve retail investors, said it raised nearly US$100 million in a funding round valued at more than US$1 billion, making it a so-called unicorn company.

Existing and new investors took part in its recent Series A round, giving HashKey a pre-money valuation of US$1.2 billion, the Hong Kong-based company said in a statement on Tuesday, without disclosing any names.

OKX Ventures, the investment arm of OKX, one of the world’s largest cryptocurrency exchanges and an applicant for Hong Kong’s virtual asset exchange license, is one of the lead investors in HashKey’s funding round, Bloomberg reported. HashKey and OKX both declined to comment.

HashKey operates the licensed HashKey Exchange, the HashKey Capital venture capital and asset management arm, and other blockchain technology services. It said it will use the funding to “solidify” its web3 ecosystem, diversify its licensed product offerings in Hong Kong, and develop its business globally.

China’s back-door cryptocurrency traders look more important than ever to Binance’s future.

HashKey Group, established in Hong Kong in 2018, was approved by the Securities and Futures Commission last August to serve retail investors under the city’s new regime for centralized cryptocurrency exchanges.

The exchange attracted 15,500 registered users at the end of 2023, with daily trading volume exceeding US$630 million in December, HashKey said last month. It said nearly 40 percent of the value traded on its platform came from professional investors.

What does Hong Kong mean by virtual assets?

HashKey Exchange handled US$15.3 million in trading volume over 24 hours through Tuesday, according to the market tracker CoinGecko. That is a trickle compared with the US$13.6 billion transacted over the same period on Binance, the world’s largest cryptocurrency exchange.

HashKey is one of many cryptocurrency firms banking on Hong Kong’s push to embrace the virtual asset industry, even as public perception of the sector has plunged following scandals involving companies including FTX and JPEX.

Twelve companies have submitted their applications for Hong Kong’s license for virtual asset trading platforms.

High costs cloud Hong Kong’s crypto hub dream

Venture capital funding in the cryptocurrency industry plunged last year following a series of collapses in 2022. In the three months ending September 2023, cryptocurrency firms around the world raised US$1.8 billion across 309 deals, representing a 69.6 percent decline in deal value and a 55.9 percent drop in deal numbers from the same period a year ago, according to data from PitchBook.

The market recently bounced back on the back of enthusiasm brought by the US approval of the first spot bitcoin exchange-traded funds (ETFs), allowing investors to gain exposure to virtual assets without directly buying cryptocurrency tokens.

Last month, Hong Kong also said it would move to open up retail access to cryptocurrency spot ETFs after only allowing retail participation in cryptocurrency futures ETFs, which hold cryptocurrency futures contracts, instead of direct investments in cryptocurrency tokens at their spot prices.