Deep Dive into HashKey's IPO Prospectus: Why Thinking Outside the Box is the Key to Understanding the Strategic Value Behind
Original Author: Luccy
Going public was undoubtedly a milestone victory for HashKey. However, as the prospectus was unveiled, four consecutive years of financial losses, a user base of only 138,000 on the trading platform, and the bleak data of its L2 chain ecosystem raised a sharp question for the market: Why does this "unprofitable trading platform" deserve it?
If HashKey is measured solely by the standards of a compliant trading platform or traditional internet metrics, these indicators will undoubtedly lead to a pessimistic conclusion. The root of the problem lies in the fact that the market is still using the framework of a "Web2 platform company" or "Web3 trading platform" to scrutinize a company that is fundamentally attempting to become Asia's digital asset financial infrastructure.
If we shift the perspective, all seemingly unfavorable data will present a different picture. The capital markets always foot the bill for the future, not today's financial statements. What the market is buying is not HashKey's current trading volume, TVL, or loss figures, but the future's greater potential.
The key to understanding HashKey today lies in what this potential actually is.
1. The Valuation Misconception: Compliance and Non-Compliance are Two Worlds, and the Choice of Fast Money is Essentially a Business Model Decision
Today, there are essentially two typical perspectives on understanding the crypto industry: one comes from the traditional capital markets, and the other comes from a crypto-native view. Due to differing understandings of the industry, there are significantly different views on emerging companies like HashKey.
1. The Choice of Speed and System: Platform vs. Infrastructure
In the crypto-native view, HashKey is a medium-sized trading platform with small scale, slow pace, significant investment, and unimpressive data.
On the other hand, many offshore trading platforms have enjoyed the retail traffic dividend and high-frequency trading fees brought by the booming crypto industry. Their growth follows a pattern of scale first, regulation later, with their core business model being fast and aggressive expansion. When we compare HashKey in this context, it naturally doesn't "look like a winner."
However, objectively speaking, from day one, it wasn't playing the same game: the advantage of offshore exchanges lies in the present, relying on speed, arbitrage opportunities, and business flexibility brought by regulatory gray areas. HashKey's advantage lies in the future, serving regulated real money such as banks, brokerages, funds, family offices, especially compliance and scale, which are almost inherently conflicting in the early stages of Web3 development.
It is hard to imagine a regulated entity handing assets over to a platform without strict licensing, auditing, and risk segregation. These security and risk control systems are not built through speed, but rather through compliance, architecture, and institutional design.
2. The Value of Time: Moat Building is not a One-Time Effort; Strategic Accumulation also Takes Time
Thus, you can understand this: when building a platform, speed is the moat; when building infrastructure, time becomes the moat.
In the industry's "gray period" over the past few years, the former naturally appeared glamorous; but as the regulatory framework clarified, the scale of tokenized assets expanded, and institutional participation became a long-term trend, the latter is the type of company that truly possesses the ability to capture long-term value. Therefore, when looking at HashKey's prospectus, one should not only focus on revenue, traffic, and transaction volume,
but should look at what it has accumulated in the "non-market dimension" over the past few years: it holds the institutional gateway to licensed trading in Hong Kong; it takes on the channel for future institutional asset entry; it constructs the underlying architecture of Asia's digital asset finance; it bets on the tokenization wave of the next decade, rather than the traffic dividend of the last round.
These capabilities, in the early stages of growth, are all displayed as inputs—research and development, compliance, manpower, and control. But at a certain point in time, they will all reverse into barriers.
Ultimately, in the shadows of the traditional capital represented by many of HashKey's shareholders, they will understand: what they are looking at is not just the current financial statements, but the company's governance ability, sustainable business model, and inevitability in the future financial system.
The capital market always pays for the future, not for today's financial statements. To truly understand and value HashKey, one must place it in the future financial order to be truly understood.
II. Financial Misconceptions: Unattractive Reports are Inevitable, but Loss is not Failure, but a Strategic Inevitability
If you only look at the financial reports, HashKey's numbers indeed do not look good. But one overlooked fact is: over the past seven years, HashKey has had countless opportunities to abandon compliance, turn offshore, and rapidly grow its revenue. These opportunities not only existed but were very tempting—light regulation, high leverage, high trading frequency, instant profits.
However, HashKey chose to refuse. This in itself is a strategy. It is not refusing a business choice but a business path: whether to be a platform for maximizing short-term profits or to be an infrastructure capable of accommodating the changes in the financial system for the next few decades?
Therefore, when the prospectus is released, these financial data are not a reflection of mismanagement but rather the inevitable result of strategic choices.
1. Time Value of Infrastructure: Input First, Value Later
Looking at the serious global financial infrastructure, including industry leaders like Coinbase, their early financial reports were far from optimistic, mostly showing consecutive years of losses. The value of infrastructure is not reflected during the construction period but rather after widespread adoption. In other words, HashKey's losses are not simply losing money; it is investing upfront in what others will need in the future.
You can sustain losses for two to three years, but you cannot bet on a model that will be regulated out of existence in the future. You can go through a long construction period, but you cannot miss out on the biggest certainty track of the future, which is institutional asset onboarding to blockchain.
This is the only correct approach for infrastructure companies. HashKey has chosen the hardest and slowest path, but it is the only path that leads to the future of the financial system.
2. Strategic Trade-offs: Sacrificing "Speed" for "Sustainability"
The offshore model pursues short-term profit maximization, but future sustainability highly depends on regulatory grey areas, posing significant risks of uncertainty. What is viable today may become illegal tomorrow.
The HashKey model pursues long-term sustainability, aiming for sustainable development within the regulatory framework, collaborating with large institutions such as banks, brokerages, and funds to build financial pathways. It allocates costs for compliance, risk control, and research and development upfront, laying the foundation for tokenization, RWA, and compliant stablecoin issuance in the future. Although it sacrifices today's speed and profit, it gains structural advantages that will not be obsolete in the next decade.
3. The Paradox of Technological Investment: Why Does L2 Look "Gloomy" Today?
Considering the enormous R&D expenses disclosed in the prospectus (over 556 million HKD in 2024 alone) and the bleak technological outcomes, aside from the exchange itself being restricted by regulations, on-chain activity is not very high. This seems to create a contradiction.
However, focusing solely on Ethereum L2, there are no fewer than a few hundred similar competitors in the market, and in fact, most of them are ghost chains. Therefore, the author does not believe that HashKey is investing technical resources in a completely oversupplied track. It must be based on its own strengths to engage in asymmetric competitive development.
From the external promotion of HashKey Chain, it is evident that its design goal was never meant to support retail high-frequency DeFi speculation from the start but rather to serve institutional RWAs and compliant stablecoin issuance. Unfortunately, the RWA market is still in the early stages of experimentation and regulatory validation, yet to witness the large-scale onboarding and trading boom of assets. The low chain activity does not reflect a technical flaw in the product itself but rather the institutional market it targets, which has not yet reached the phase of explosive traffic.
3. Business Model Reversal: Tokenization and Institutional Asset Entry will Rewrite HashKey's Growth Curve
It is evident that the current HashKey is not a trading platform that relies on retail trading fees for its livelihood. It is betting on a longer cycle, higher certainty, and larger-scale trend: the tokenization of traditional financial assets and institutional asset entry. This is a once-in-a-20-year structural opportunity in global finance. As a result, there will inevitably be a fundamental shift in the business model.
1. Revenue Model: From Traffic to Service
HashKey's business model is currently undergoing a fundamental reversal, transitioning from the traditional 'traffic monetization' model to the 'infrastructure service' model. In its prospectus, HashKey emphasized CaaS services, which is a signal of this model transition. It is not competing for retail users but building on-chain infrastructure for institutions, brokerages, banks, stablecoin issuers, and wealth management institutions. HashKey's future growth curve will depend more on how much of the global assets under management (AUM) choose to tokenize and trade through Hong Kong's compliant channels. Its revenue will come from custody, asset issuance, etc., with revenue quality and stability far exceeding retail trading fees.
2. Strategic Balance: Balancing Offshore and Onshore
However, perhaps HashKey realizes that the infrastructure construction cycle is too long and arduous, and the growth rate of pure compliance revenue cannot support massive investments in the short term. Therefore, strategic trade-offs must be made:
The core strategy is still to focus on solidifying Hong Kong's compliance capabilities and building an institutional gateway. At the same time, in terms of short-term business balance, there has been a strong push towards offshore exchanges in the past two years. The strategic positioning of this move is to drive retail user growth, supplement short-term revenue, and undertake the responsibility of international market expansion.
While maintaining an unwavering commitment to long-term strategy, tactically supplementing through offshore exchanges adds pressure for continuous strategic investment and practical considerations.
These choices are not without cost: delayed profit realization and the market's understanding cost of a 'dual-track strategy' are all real constraints that HashKey must bear.
4. Conclusion
It is not strange for the market to scrutinize a company preparing for an IPO with a magnifying glass, and the financial scrutiny is very reasonable. However, the real question is: How should HashKey be viewed as a company?
Its losses are not a problem with the business model, but the cost of the strategic path. The story of financial infrastructure has never been about speed but about time.
The capital market always pays for the future. As stated in HashKey's prospectus, it does not describe today's financial situation but rather the strategic coordinates for the next decade. If the past narrative belonged to trading platforms and volume, then the story of the future will belong to regulatory gateways, institutional infrastructure, and a tokenized financial system. And when this era truly arrives, all the seemingly "ugly" numbers of today will become the necessary background to understand HashKey.
To understand HashKey, one must look beyond today and gaze into the future. Because its true value has never been in the present but on the next page of the era. However, the market never just listens to stories; in the end, it will validate everything with data. In the coming years, it is the period when HashKey must provide answers.
This article is a contributed submission and does not represent the views of BlockBeats.
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