Searching for Hong Kong's Cryptocurrency "Unicorn"
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Searching for Hong Kong's Cryptocurrency "Unicorn"
The birth of a new unicorn is often accompanied by the successful resolution of a sufficiently large problem.
Navigating Web3 tides with focused insightsAuthor: Zhou Zhou, Foresight News
"Sequoia Capital, IDG, Northern Light Venture Capital, and others are already looking into investing in Hong Kong-based cryptocurrency exchanges," said Henry, a venture capital investor.
In addition to venture capital firms, Foresight News has observed that internet companies (such as Futu Securities and Tiger Brokers), crypto giants (like OKX, Bitget, Binance), and traditional financial institutions (including Victory Securities, Interactive Brokers, and Harvest Fund) are all rushing into Hong Kong's cryptocurrency industry, hoping to secure their place in the next era by leveraging favorable local policies.
"There will definitely be a unicorn emerging from Hong Kong’s crypto sector." Adam Zhou, co-founder of Hong Kong-based crypto firm VDX, predicted. Previously, Adam Zhou served as Managing Director at Victory Securities in Hong Kong with over 10 years of experience in financial institutions.
"This is going to be a multi-billion dollar market," declared Patrick Poon, CEO of OSL, a licensed cryptocurrency exchange in Hong Kong, speaking to Foresight News.
2023 marked the first full year of regulatory compliance for Hong Kong’s cryptocurrency industry. That year, Hong Kong approved two crypto firms—HashKey and OSL—as licensed financial institutions. Additionally, as of January 31, 2024, another 14 crypto companies were publicly listed as actively applying for licenses. The future unicorn of Hong Kong’s crypto industry may well emerge from among these 16 companies.
Multiple executives from cryptocurrency firms believe: "The 14 companies currently applying for licenses are expected to receive formal approval or rejection before mid-2024."
As a nascent industry, Hong Kong's crypto space hasn't had a smooth journey. Many challenges have surfaced amid rapid growth: top-tier crypto exchanges struggle to turn profits, account opening processes remain cumbersome, product offerings are limited, competition is fierce, and operating costs are high. "Is Hong Kong embracing the crypto industry too late?" some practitioners have questioned.
Latest data shows that globally, more than 500 million people now hold cryptocurrencies. Binance alone has over 170 million registered users, whereas leading Hong Kong crypto exchanges collectively serve fewer than 200,000 users—just one-thousandth of Binance’s user base.
"Binance is huge, but compliant crypto exchanges can become many times larger," said Adam Zhou. Despite current limitations, many industry insiders remain confident about the long-term prospects of Hong Kong’s crypto exchanges.
Can Hong Kong’s regulated crypto exchanges leverage late-mover advantages to leapfrog ahead? Where lie the real strengths and opportunities for licensed crypto exchanges in Hong Kong? These questions have become central for anyone interested in Web3 opportunities across Hong Kong, the Chinese-speaking world, and Asia at large.
Rediscovering the Unicorn
"We aim to become an exchange with real influence—something like the Hong Kong Stock Exchange (HKEX)." said Adam Zhou.
As a new form of asset trading platform, some Hong Kong crypto entrepreneurs believe the emergence of crypto exchanges signifies the birth of a new 'HKEX' or a new 'Nasdaq.'
As of January 30, 2024, HKEX lists 2,600 companies. In comparison, Coinbase—the largest U.S.-based compliant crypto exchange—lists 238 tokens, while Binance—the world’s largest crypto exchange—lists 386. By contrast, HashKey Exchange, a leading licensed crypto exchange in Hong Kong, has only launched 19 tokens so far. Clearly, there remains a long road ahead for crypto exchanges.
Looking forward, it is foreseeable that Hong Kong’s licensed crypto exchanges will not only list hundreds or even thousands of tokens, but also attract non-Web3 institutions to launch token offerings. A co-founder of a crypto exchange told me: “Startups in AI, gaming, and the metaverse could theoretically list on crypto exchanges—there’s nothing in SFC regulations prohibiting this.”
The NYSE was founded in 1792, AMEX in 1817, NASDAQ in 1971, and Coinbase—the first major U.S. crypto exchange—in 2012. In every century and every era, new types of exchanges emerge, reflecting fundamental shifts in economic paradigms.
Due to differing structures, the NYSE typically hosts large, established, stable corporations such as Coca-Cola, Alibaba, and IBM; Nasdaq attracts high-tech innovators like Apple, Google, Amazon, and Facebook. Crypto exchanges, meanwhile, appeal to smaller-market-cap blockchain organizations and metaverse ventures such as Ethereum, Binance, and Bored Ape Yacht Club. Decentralized crypto exchanges go even further by enabling virtually zero-cost “listings” for individuals—a radical transformation of traditional finance.
For investors, this represents an unmissable opportunity—and indeed, one they’re actively pursuing. “Sequoia Capital, IDG, Northern Light Venture Capital—they’re all seeking investment opportunities in Hong Kong crypto exchanges,” said Henry, the VC investor.
Henry added: “VCs find themselves in an awkward position within the crypto space because crypto has fundamentally altered the underlying logic of finance—including investment models. As a result, VCs wield far less influence here compared to other industries. Many opportunities instead go to native crypto funds or individual investors. However, Hong Kong’s regulated crypto market presents a natural fit where traditional VCs can play a meaningful role.”
Some industry players argue that Hong Kong, as Asia’s financial hub backed by China’s vast pool of internet talent and market resources, holds unique advantages in developing its crypto ecosystem. Japan, South Korea, and Europe each have their own compliant crypto exchanges, yet many investors see greater potential in Hong Kong.
Weng Xiaoqi, CEO of HashKey Exchange, said: “Europe lacks sufficient internet talent. Japan suffers from both a shortage of tech talent and absence of status as a financial center. Hong Kong, however, is both a global financial hub with strong institutional presence and benefits from proximity to mainland China, allowing continuous access to top-tier internet professionals.” Weng emphasized: “Compliant crypto exchanges require talent who understand crypto, grasp how financial institutions operate, and know how to build internet products—all three are essential.”
Looking back at 21st-century technological evolution, China rarely misses out on transformative technologies and often excels through late-mover advantage. If we must draw parallels, the relationship and global standing of “Hong Kong’s crypto unicorn” relative to Coinbase might mirror Tencent vs. Facebook (social media), Alibaba vs. Amazon (e-commerce), or NIO/XPEV/Li Auto vs. Tesla (electric and smart vehicles).
This narrative is grand and compelling, making Hong Kong’s crypto exchanges a focal point for investor attention.
Three Long-Term, High-Potential Tracks
The rise of a new unicorn usually follows the successful resolution of a sufficiently large problem.
Compared to unregulated exchanges, Hong Kong’s crypto exchanges face a unique challenge: how to deeply integrate cryptocurrencies with traditional finance and accelerate the flow of capital from legacy financial systems into the crypto sector. This opportunity was previously inaccessible to non-compliant exchanges.
Currently, beyond the familiar exchange operations, competitive edges for Hong Kong’s licensed crypto exchanges include ETFs, RWA (real-world asset tokenization), and B2B2C crypto distribution models. Overall, their strength lies in “integration” and “innovation” with traditional finance.
These three tracks are novel, highly differentiated, and offer expansive business potential—they represent significant new sources of growth capable of reshaping the entire crypto market.
Weng Xiaoqi, CEO of HashKey Exchange, told Foresight News: “ETFs and RWA present golden opportunities for compliant crypto exchanges to leapfrog ahead.”
Take the U.S. spot Bitcoin ETF as an example. Since its approval on January 10, 2024, massive inflows have entered Bitcoin. By January 30, BlackRock and Fidelity each held over $2 billion worth of Bitcoin, with total holdings across ten spot Bitcoin ETFs exceeding $27.7 billion. Standard Chartered analysts estimate that by end-2024, inflows into spot Bitcoin ETFs could reach $50–100 billion—an enormous injection into Bitcoin’s current market cap of under $900 billion.
According to incomplete data from Foresight News, over 70 U.S. firms are involved in the spot Bitcoin ETF value chain, many of them traditional financial institutions.
And this is just one month after the U.S. launch. With U.S. spot Bitcoin ETFs now live, Hong Kong’s version is clearly imminent. Tencent News’ “Frontline” reported that Harvest Fund Management Hong Kong submitted an application for a spot Bitcoin ETF to the SFC on January 26—making it the first institution in Hong Kong to do so, with listings expected on HKEX shortly after Chinese New Year.
A senior executive at a crypto exchange revealed to me that around 20 financial institutions are planning to apply for spot Bitcoin ETFs. Weng Xiaoqi previously told Caixin that approximately 10 fund managers are preparing to launch such products. Foresight News understands that institutions currently preparing spot Bitcoin ETFs include Harvest Fund, Value Partners, and CSOP Asset Management.
Beyond ETFs, RWA (tokenization of real-world assets) is another major track accessible only to compliant exchanges.
Weng Xiaoqi believes: “RWA issuance requires legally recognized security tokens. Without a license, issuing such tokens would be illegal securities offering—which is a criminal offense everywhere. In other words, RWA is inherently a story for licensed exchanges.”
Lennix Lai, Global Chief Commercial Officer of OKX, told Foresight News: “We expect Hong Kong’s RWA and stablecoin legislation to be released in Q3 2024.” “Regulators like the SFC have already begun public consultations.”
If ETFs primarily channel traditional capital into Bitcoin and boost its overall market cap, RWA enables the tokenization of valuable financial assets—U.S. Treasuries, equities, real estate, gold—so that portions of those investments stay within the crypto ecosystem. This allows ordinary investors to buy $1 worth of U.S. Treasury bonds, $1 of gold, or $1 of Tesla stock. It will further unlock the flow of traditional financial assets into crypto markets.
Currently, financial institutions in the U.S. and Singapore lead in RWA development. Henry, founder of DigiFT—a regulated RWA exchange in Singapore—told me that DigiFT has already issued five tokenized financial products, including U.S. Treasuries, Treasury funds, and bank debt. Hong Kong is also expected to introduce RWA regulations this year. Foresight News learned that crypto exchanges like HashKey and OSL are prioritizing this area and have dedicated teams advancing RWA initiatives.
Weng Xiaoqi revealed that HashKey has already partnered with China Asset Management on RWA projects and expects to enter the market soon.
Multiple exchange professionals told Foresight News that a key competitive edge for Hong Kong crypto exchanges lies in B2B2C operations—selling crypto through traditional brokers, similar to ETFs and RWA. Broadening this definition includes providing SaaS services to crypto platforms and financial institutions.
Compared to unregulated crypto exchanges, this represents a distinct advantage for licensed platforms.
Adam Zhou said: “Among Hong Kong’s 300 active brokerages, if 100 sell just one crypto asset, the market could easily reach several billion dollars—that’s the opportunity.”
Foresight News reports that over 20 brokerages have started selling crypto. A business leader at a crypto exchange revealed that more than half of active brokerages are planning to enter crypto—including Futu Securities, Interactive Brokers, Tiger Brokers, and Victory Securities.
The integration between Hong Kong’s financial sector and crypto industry has taken its first substantive step.
Compared to Binance (as a proxy for dominant global crypto exchanges), Hong Kong-based crypto exchanges currently lag in many areas: complex account openings, subpar app experiences, limited token listings, slow rollout of new coins, and no derivatives trading. Their existing framework isn’t truly their competitive edge.
Yet, these three long-term, high-potential tracks are tailor-made opportunities for licensed crypto exchanges—not only bringing net-new volume to the industry but also forming critical drivers of future growth.
"Until now, the crypto industry has been shaped and led by crypto-native companies. But as U.S. regulators conclude investigations into firms like Binance, a new era begins—one where regulated crypto companies will set the standard and become mainstream," said Patrick Poon.
Final Thoughts
An interesting phenomenon: in U.S. capital markets, Coinbase and Nasdaq now have nearly equivalent valuations.
As of January 30, Coinbase—listed on Nasdaq—had a market cap of $31.3 billion, while Nasdaq itself stood at $33.7 billion. Over the past three years, the two exchanges have seen their valuations closely tracking each other. On Nasdaq, investors increasingly view Coinbase as having the potential to become the next Nasdaq.
Meanwhile, the market cap of a leading Hong Kong crypto exchange (HK$3.8 billion) pales in comparison to HKEX (HK$298.7 billion). This gap reflects the early stage of Hong Kong’s crypto industry. Among the 16 licensed or applying crypto firms, it remains unclear which will emerge as the dominant player.
HashKey Exchange recently launched its app and has already surpassed 150,000 users. OSL has just received a $90 million strategic investment from BGX, rejuvenating its team and injecting a retail-focused mindset into its established structure. VDX assembled a core team combining expertise in crypto, the SFC, and Hong Kong finance from day one. OKX, a leader among native crypto exchanges, boasts mature products and deep roots across China and Asia. PantherTrade, a subsidiary of Futu—the largest Chinese internet brokerage—naturally inherits DNA in internet financial products. Over the next five years, these players will deliver definitive answers.
This is a long-term, high-potential industry—and it has only just begun.
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