Hong Kong’s crypto market appears to be facing turbulence as licensed exchanges opt for overseas ventures amid regulatory concerns.
HashKey, one of the two licensed crypto exchanges in Hong Kong, decided to expand its reach overseas with a Bermuda license in part due to fears that the city’s new regulatory approach might bar it from accessing investors around the globe.
In an interview with the Financial Times, HashKey Group COO Livio Weng said the decision to go beyond Hong Kong was because “the local market is not that big,” adding that the regulatory burden in the region “blocks a lot of global users […].”
As crypto.news previously reported, HashKey launched a new venture called HashKey Global established for an international business. The new venture is available to qualified retail investors only, with plans to introduce futures, staking, and other financial products within the next quarter.
Commenting on Hong Kong’s regulatory approach, Weng advocated for regulatory flexibility, suggesting that Hong Kong needs to streamline its rules if the region really wants to become a crypto-friendly hub.
As of press time, Hong Kong only allows exchanges to serve clients who passed Know-Your-Customer (KYC) checks and have funds in a local bank account. Weng said that approving multiple exchanges won’t solve the problem, as the local market “couldn’t even support four [crypto exchanges].”
Meanwhile, HashKey’s rival, OSL, seems to be facing similar challenges, as it recently sold a 30% stake to BGX, which FT’s people familiar with the deal described as an “unlicensed crypto group with links to China.” As of press time, OSL made no public statements on the deal.