Hong Kong’s HashKey Adds AVAX Trading
HashKey Hong Kong, the Chinese autonomous territory’s first licensed retail crypto exchange, has unveiled an addition to its platform with the launch of Avalanche (AVAX) trading.
According to an announcement published to its website on Wednesday, HashKey has listed Avalanche on Thursday with the caveat that access to AVAX trading will be reserved for professional investors, as defined by Hong Kong’s Securities & Futures Commission (SFC).
Accessible to professional investors
To meet the criteria as a professional investor in Hong Kong, individuals must possess an investment portfolio valued at a minimum of 8 million Hong Kong dollars, roughly equivalent to $1 million. This decision sets AVAX apart from other widely traded cryptocurrencies, such as Bitcoin and Ether, which remain accessible to retail investors in Hong Kong. While Tether (USDT) enjoys retail status, the majority of altcoins on HashKey will remain the preserve of professional investors.
This move is a direct result of the SFC’s proactive stance on regulating the rapidly expanding crypto market in Hong Kong. Since the introduction of regulated retail crypto trading in the Chinese autonomous territory in August, the SFC has imposed rigorous requirements on exchanges. HashKey mandates users to deposit a minimum of 10,000 Hong Kong dollars or $1,500 into their exchange accounts as part of the Know Your Customer (KYC) verification process.
Low trading volume
Amid these regulatory challenges, HashKey Hong Kong currently reports a 24-hour trading volume of approximately $5.3 million, significantly lower than its global peers. This lower trading volume suggests that stringent regulations may be affecting the exchange’s ability to attract retail investors effectively.
The path to regulatory compliance in Hong Kong has been anything but smooth for crypto exchanges. Reports indicate that these platforms have collectively invested over $25 million in establishing the requisite infrastructure for obtaining a Hong Kong Virtual Asset Service Provider (VASP) license. It was reported earlier this year that crypto firms are forking out between $2.55 million and $25.5 million in order to secure a VASP trading license.
Despite the challenges, HashKey is looking at various avenues in bringing its offering forward. Earlier this month the firm signed a memorandum of understanding (MOU) with insurer OneDegree. That collaboration could be significant as it should lead to the assets of HashKey users being protected and insured on the platform. That would solve a major issue for participants in the crypto space amid the backdrop of ongoing platform failures and hacks.
JPEX collapse
Even as regulatory efforts intensify, the crypto industry in Hong Kong has not been impervious to bad actors. The recent collapse of the JPEX crypto exchange earlier this month serves as a stark reminder of the ongoing risks associated with the industry. Described as the largest financial fraud in Hong Kong’s history, JPEX faced allegations of embezzling over $178 million of investors’ funds. Notably, JPEX was operating without SFC registration at the time of the alleged embezzlement.
In response to such incidents, the SFC has taken proactive measures by publishing a warning list of crypto exchanges considered non-compliant within the Chinese autonomous territory.
