HASHKEY Group, operator of one of Hong Kong’s two licensed crypto exchanges, said it raised nearly US$100 million in a funding round and is now a so-called unicorn with a valuation exceeding US$1 billion.

The company said on Tuesday (Jan 16) that existing and new investors contributed to the funding but refrained from identifying them. The money will be used to build out a Web3 ecosystem as well as licensed products in Hong Kong, the firm said. HashKey added its valuation lies north of US$1.2 billion.

OKX Ventures – the investment arm of the OKX digital-asset exchange – is among the lead investors in the round, sources familiar with the matter said, asking not to be identified as the information is not public. Representatives at OKX and HashKey declined to comment.

HashKey’s activities include the trading platform, venture funding and asset management in Hong Kong. It is one of a number of crypto businesses seeking to tap into the city’s push to foster a digital asset hub. Bloomberg News reported in May that HashKey was in talks to raise US$100 million to US$200 million at a valuation above US$1 billion, according to sources familiar with the matter.

Crypto venture capital

Crypto startup funding slumped after a 2022 market rout and bankruptcies such as the collapse of the FTX exchange. Token prices revived over the past 12 months, partly on optimism over the first spot Bitcoin exchange-traded funds in the US. The rebound has stirred hopes of an improved venture capital outlook.

Hong Kong rolled out a dedicated virtual asset regulatory framework in June, part of an effort to restore its lustre as a cutting-edge financial centre. The rules seek to woo companies but also focus on investor protection.

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Under the regime, retail investors can trade major tokens such as Bitcoin and Ether on licensed exchanges. BC Technology Group’s OSL and HashKey Exchange are the only platforms with Hong Kong crypto permits at the moment. The city is also open to allowing spot crypto exchange-traded funds. Rules for stablecoins – tokens meant to have a constant value – are due by 2023-2024.

Hong Kong’s outlook

While Hong Kong offers a local market and a conduit to Chinese wealth, it remains unclear just how many crypto exchanges the city can really support – and whether officials will retain crypto as a priority longer term given the sector is prone to bouts of scandal.

HashKey Exchange garnered over 155,000 registered users since starting its trading service for retail investors in late August, according to the statement. Data providers CoinGecko and CoinMarketCap estimate HashKey Exchange’s spot trading volume at about US$17 million in the 24 hours to 7.30 am on Tuesday in Singapore. That compares with US$14 billion at Binance, the world’s biggest crypto platform.

HashKey started in 2018 as an early investor in Ethereum, which is now a key digital ledger. HashKey’s chairman Xiao Feng delved into blockchain investment while he was with Chinese cars-to-energy conglomerate Wanxiang Group. BLOOMBERG