How are top Web3 projects establishing in Hong Kong doing on compliance?
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How are top Web3 projects establishing in Hong Kong doing on compliance?
This article will briefly review the major cryptocurrency projects operating under Hong Kong's strict regulatory environment.
Navigating Web3 tides with focused insightsBy: ManQin Lawyers
Hong Kong, as Asia's financial hub, has consistently been at the forefront of global virtual asset regulation. Initiatives such as the new Virtual Asset Trading Platform (VATP) licensing regime effective from June 1, 2023, the recent consultation paper on stablecoin issuance, and the sandbox application list, all mark significant progress in Hong Kong’s regulatory approach toward cryptocurrencies.
These measures aim to enhance market integrity and stability by strengthening investor protection and transparency, while also providing clear regulatory guidance for crypto projects operating in Hong Kong—drawing attention from global investors and blockchain enterprises alike.
ManQin Lawyers frequently receives inquiries about which well-known projects have entered Hong Kong. This article offers a brief overview of major cryptocurrency projects operating under this strict regulatory environment, serving as a reference for entrepreneurs considering establishing operations in Hong Kong.
* The following list is unordered and sorted only by year of establishment
The Sandbox
#Gaming #Metaverse #GamingPlatform
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Founded: 2012
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Website: sandbox.game
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Funding: $117 million, led by Animoca Brands, Hashed, Kingsway Capital, and SoftBank Vision Fund
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Blockchains: Ethereum, Polygon
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Description: The Sandbox is a decentralized, community-driven gaming ecosystem where creators can share voxel assets and gaming experiences on Ethereum and monetize them. Within The Sandbox economy, users utilize the platform token SAND to engage in gameplay activities on the Ethereum blockchain. Its ASSETs (in-game items) and LAND (virtual land) exist as NFTs. In addition to completing in-game tasks, users can purchase SAND via other cryptocurrency exchanges and profit from trading.
Currently, Hong Kong does not have specific laws or regulations governing game distribution. However, The Sandbox involves extensive NFT and SAND token transactions, and the issuance of SAND could potentially be classified as an Initial Coin Offering (ICO).
The land, assets, and SAND token in The Sandbox represent digital units of asset value and may serve investment purposes, thus falling within the scope of virtual assets recommended for regulation under current consultation proposals. Furthermore, The Sandbox’s operation of an internal marketplace facilitating transactions of land and assets may lead it to be deemed a virtual asset service provider subject to government oversight.
However, in practice, regulatory focus by the Hong Kong government and the Securities and Futures Commission (SFC) remains primarily on tokens used for payment or those classified as securities. NFTs with purely commodity characteristics—such as land and assets in The Sandbox—are currently not regulated.
Alchemy Pay
#CeFi #Payment
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Founded: 2018
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Website: alchemypay.org
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Funding: $10 million
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Blockchains: Ethereum, BNB Chain
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Description: Founded in 2017 and headquartered in Singapore, Alchemy Pay is a payment gateway designed to seamlessly connect cryptocurrencies with traditional fiat currencies for businesses, developers, and users. The platform supports payments across 173 countries.
Alchemy Pay provides a one-stop on/off-ramp solution for buying and selling cryptocurrencies and fiat currencies, allowing platforms and decentralized applications (dApps) to easily integrate its services. Its white-label crypto card solution enables businesses and token issuers to offer branded virtual or physical cards for instant global spending. Its NFT checkout feature supports direct NFT purchases using fiat payment methods. ACH is Alchemy Pay’s native network token, available on both Ethereum and BNB Chain.
Despite increasingly stringent regulations in the crypto space, Alchemy Pay has not been hindered; instead, its forward-thinking compliance strategy has fueled rapid growth in overseas markets. In January 2023, Alchemy Pay founder Shawn Shi was selected for the “2022 Forbes China Web3.0 Innovation Pioneer” list. Today, Alchemy Pay serves as a payment gateway linking fiat and crypto assets for users in 173 countries worldwide, partnering with international payment networks including Visa, Mastercard, Discover, Diners Club, Google Pay, and Apple Pay, as well as hundreds of local payment providers, steadily expanding its global partner network.
In March 2024, the cryptocurrency payment gateway Alchemy Pay announced it successfully obtained a Money Transmitter License (MTL) from the state of New Hampshire, USA, following existing licenses in Arkansas and Iowa. It is actively pursuing MTL licenses in other U.S. jurisdictions as part of its broader effort to expand crypto payment services.
Bee Computing
#Mining
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Founded: 2018
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Website: bee-comp.com
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Funding: $40 million, acquired by BIT Mining in 2021
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Description: Established in March 2018, Bee Computing was the first company to receive investment from a global semiconductor giant. Leveraging deep expertise in semiconductors, Bee Computing collaborates with leading Asian chip design firm MTK, world-class semiconductor manufacturer TSMC, and top-tier IC assembly and testing company ASE to ensure technological leadership. The company has mastered 7-nanometer chip technology, offering advanced mining equipment, and began developing Ethereum ASIC chips in 2020.
In Hong Kong, cryptocurrency mining is not illegal, but large-scale operations may fall under data center regulations. Given Hong Kong’s scarcity of land, running mining operations locally raises complex land use issues. Additionally, mining companies must ensure their facilities comply with the Building Energy Efficiency Ordinance, a regulation targeting high electricity consumption.
HashKey Group
#CeFi #AssetManagement
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Founded: 2018
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Website: hashkey.com
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Funding: $100 million
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Description: HashKey Group is a full-stack digital asset financial services group in Asia, offering institutional clients, family offices, funds, and professional investors new investment opportunities and solutions within the digital asset and blockchain ecosystem. The group provides a comprehensive ecosystem across the digital asset sector, including venture capital fund HashKey Capital, blockchain node validation service HashKey Cloud, tokenization service HashKey Tokenization, and services for HashKey NFT, Web3 PFP incubation, and community operations.
HashKey Group holds virtual asset operation licenses issued by the Hong Kong Securities and Futures Commission (SFC) and Japan’s Financial Services Agency (FSA), and has obtained exempted operating status under Singapore’s Payment Services Act from the Monetary Authority of Singapore (MAS).
On November 10, 2022, Hash Blockchain Limited (HBL), a subsidiary of HashKey Group, received SFC approval to operate a virtual asset trading platform under Type 1 (Securities Dealing) and Type 7 (Automated Trading Services) licenses, serving professional investors.
In 2023, it was announced that HBL had received SFC approval to conduct over-the-counter (OTC) trading business for virtual assets. When there is demand to trade tokens not listed on exchanges, HBL can act as an intermediary to facilitate such transactions.
On April 8, 2024, HashKey Group COO Owen Wong stated in an interview that the group had obtained Bermuda’s “Comprehensive License under the Digital Asset Investor Protection Regime” and would launch the HashKey Global trading platform. Initially, it will offer more than 20 cryptocurrencies to qualified retail investors, with plans to roll out futures and staking products within a quarter. He noted that the two platforms serve different markets: HashKey Exchange, licensed in Hong Kong, focuses on the Hong Kong and surrounding regions and caters to institutional clients, while HashKey Global targets retail investors unable to access the Hong Kong market—excluding mainland China, Hong Kong, the U.S., and jurisdictions explicitly prohibiting virtual asset platforms—with expected primary users being overseas Chinese and Southeast Asian customers.
On August 3, 2024, HashKey Group’s OTC division obtained a payment license from the Monetary Authority of Singapore under the 2019 Payment Services Act, permitting the provision of “digital payment token” services in Singapore.
OSL
#CEX #Brokerage #Custody #OTC
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Founded: 2018
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Website: osl.com
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Funding: $90 million
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Description: OSL is an Asian digital asset platform offering brokerage, custody, exchange, and software-as-a-service (SaaS) solutions to institutional clients and professional investors. OSL was the first company to obtain a Type 1 and Type 7 digital asset license from the Hong Kong Securities and Futures Commission (SFC).
In January 2022, following a joint circular issued by the Hong Kong Monetary Authority (HKMA) and the SFC, registered institutions and licensed entities were permitted to collaborate with SFC-licensed virtual asset trading platforms to provide digital asset investment services. According to the SFC’s Q2 2024 report, significant progress has been made in regulating digital assets: nine entities were newly added to the SFC’s warning list of suspected unlicensed virtual asset trading platforms during the quarter, bringing the total number of suspicious platforms to 42. Only two platforms—OSL and HashKey—are currently licensed. OSL CEO Cui Song stated: “Holding a license is not just about compliance—it’s about ensuring the highest standards of security and investor protection.”
MaiCapital
#CeFi #AssetManagement #HedgeFund
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Founded: 2019
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Website: maicapital.io
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Description: MaiCapital is a hedge fund specializing in blockchain and cryptocurrency investments. The company is licensed by the SFC to operate Type 9 (Asset Management) and Type 4 (Securities Advisory) businesses in Hong Kong. Its flagship product, the Blockchain Opportunity Fund, is a multi-strategy hedge fund employing quantitative trading and arbitrage strategies.
MaiCapital holds both Type 9 (asset management) and Type 4 (investment advisory) licenses. Unlike traditional asset managers, cryptocurrency portfolios involve unique risks. Therefore, licensed asset managers wishing to hold virtual assets exceeding a certain threshold in their portfolios must undergo an “uplift” process—submitting additional reports to the SFC for approval. In 2022, the Hong Kong Securities and Futures Commission (SFC) authorized MaiCapital to manage investment portfolios consisting of up to 100% virtual assets.
MANTRA
#Infrastructure #Layer1 #RWA
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Founded: 2020
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Website: mantrachain.io
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Funding: $11 million, led by Shorooq Partners
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Description: MANTRA aims to become the first Layer 1 blockchain capable of complying with and enforcing real-world regulatory requirements for RWA (Real World Assets). By accelerating the adoption of tokenized RWAs, MANTRA has the potential to unlock a $16 trillion RWA economy through its regulation-ready blockchain. Through the MANTRA Chain compliance framework, traditional finance (TradFi) institutions can easily transition to and leverage asset tokenization and blockchain solutions, driving global RWA growth.
Applications built on MANTRA Chain benefit from a compliant environment, enabling the creation and access to regulated digital assets and fostering a transparent ecosystem. By securing the first financial license in the UAE, MANTRA positions itself at the forefront of the rapidly growing RWA industry in the Middle East and Asia. Its 2024 goal includes tokenizing diverse asset classes such as real estate, private market funds, private equity, art, and government bonds. On August 13, 2024, the Hong Kong High Court ordered key individuals involved in the MANTRA DAO project to disclose financial records in response to allegations of asset misappropriation and unauthorized control.
ManQin Lawyers Summary
Of course, numerous other Web3 projects have established presence in Hong Kong, including CrossSpace and Kikitrade in SocialFi, Forkast in media, TokenPocket and HyperPay in wallets, Linear Finance and Wombat Exchange in DeFi, Animoca Brands and Artifact Labs in NFTs, and Brinc as an incubator.
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