The Web3 landscape in Hong Kong is undergoing a pivotal transformation. As regulatory frameworks solidify and institutional interest surges, the city is positioning itself as a leading hub for compliant digital asset innovation. With the Virtual Asset Trading Platform (VATP) licensing regime now fully in effect, and major financial products like Bitcoin and Ethereum spot ETFs listed on the Hong Kong Stock Exchange, the market is entering a new phase of growth.
At the heart of this evolution is HashKey Exchange—one of only two fully licensed VATP platforms in Hong Kong, alongside OSL. In this exclusive interview, HashKey CEO Livio Weng (翁晓奇) shares insights into the current state of Hong Kong’s virtual asset market, the role of traditional finance, and what lies ahead for compliant Web3 development.
The State of VATP Licensing and Market Readiness
Q: On June 1, the Hong Kong Securities and Futures Commission (SFC) recognized 11 platforms as “deemed-to-be-licensed” under the VATP regime—though not fully licensed. How should we interpret this status, and what does it say about the pace of licensing?
"The 11 platforms granted deemed-to-be-licensed status have formally applied and met preliminary requirements, but they’re not yet fully approved," explains Weng. "This transparency helps users identify which platforms are on the regulatory path, but it doesn’t equate to full compliance."
Out of 28 initial applicants, only HashKey and OSL have received full licenses. The rest remain in review or have withdrawn. Weng notes a clear regulatory preference: institutions with clean track records, deep understanding of Hong Kong’s financial rules, and strong traditional finance backgrounds are being prioritized.
“This reflects Hong Kong’s identity as an ‘institution-first’ market,” he says. “The regulators are curating a compliant ecosystem that aligns with local financial culture—where risk management and investor protection come first.”
While some may view the licensing pace as slow, Weng emphasizes that HashKey itself waited years—from 2019 to 2023—to secure full approval. “We walked through uncharted territory. Now, later applicants benefit from that groundwork. Still, the anxiety of waiting for a license and proving commercial viability? We’ve lived it.”
Looking ahead, Weng believes the next phase—from 1 to 100—is imminent. With global macro conditions improving and potential U.S. rate cuts boosting liquidity, Hong Kong’s Web3 market is poised for acceleration. “Expect faster VATP approvals and quicker upgrades for firms holding SFC 1, 4, and 9 licenses. This will open the floodgates for banks and securities firms to enter Web3.”
👉 Discover how institutional investors are preparing for the next wave of digital asset growth.
Traditional Financial Institutions Enter the Web3 Arena
Q: Since the launch of Bitcoin and Ethereum spot ETFs in Hong Kong, traditional brokers like Victory Securities and Futu have begun offering crypto trading. What’s their potential?
According to Weng, this shift signals a long-term structural change in Hong Kong’s financial ecosystem.
“Brokers such as Victory, AJK, Futu, Tiger Brokers, and Interactive Brokers are rapidly expanding into crypto by upgrading their SFC 1-license status,” he says. “They’re partnering with licensed exchanges like HashKey to offer compliant crypto deposit and withdrawal services.”
This integration gives access to tens of millions of existing brokerage clients—users already active in stock markets—who can now seamlessly invest in BTC and ETH.
HashKey has already onboarded dozens of top-tier brokers. The results? In June, app downloads surged 40% month-on-month, while omnibus brokerage transaction volumes jumped 131%.
“These brokers are becoming critical bridges between traditional finance and Web3,” Weng notes. “Their risk management expertise builds trust—especially among conservative investors.”
Drawing parallels with Robinhood’s U.S. trajectory, where crypto now contributes over 20% of total revenue, Weng sees similar potential in Hong Kong. “We’re approaching a market window—late 2025 into 2026—where capital inflows could accelerate dramatically.”
Coexistence of Licensed and Unlicensed Platforms
Q: Despite the end of the transition period, some unlicensed platforms still operate and accept deposits. What’s the outlook for market share between licensed and unlicensed exchanges?
“In the short term, the overall market size won’t shift drastically,” Weng acknowledges. “Many users still choose platforms based on familiarity or features like access to altcoins and leverage.”
Unregulated offshore platforms offer flexibility—new token listings, high-leverage derivatives—but come with higher risks. In contrast, licensed exchanges must adhere to strict rules, including a 12-month review period for new coin listings, which naturally filters out low-quality assets.
However, as market sentiment turns bullish and new institutional capital enters, compliance will become a key differentiator.
“When ‘old money’ arrives, they won’t trust gray-market platforms,” Weng says. “They’ll demand regulated venues with audited reserves and transparent operations.”
He forecasts that licensed exchanges could capture over 50% market share during the next bull cycle—mirroring how spot ETFs have already become trusted gateways for mainstream investors.
Future Growth Levers: Staking ETFs, RWA, and Institutional Onboarding
Q: What factors will shape Hong Kong’s Web3 future? What changes can we expect in H2 2025?
Weng sees Hong Kong’s Web3 adoption as mutually beneficial: Web3 needs Hong Kong’s financial infrastructure, and Hong Kong needs Web3’s liquidity.
“Last year, over a thousand Hong Kong-listed stocks had daily trades under HK$10,000,” he recalls. “The market was starved for activity. Crypto’s trillion-dollar ecosystem can revitalize it.”
Recent milestones—like Hong Kong launching the world’s first physically-backed Ethereum spot ETF—have already attracted serious institutional interest.
“We’re spending significant time educating family offices and traditional funds,” Weng says. “They’re asking: How do we enter? At what scale? What are the risks?”
While U.S. institutions lead in scale due to early ETF approvals, Hong Kong has an edge: innovation potential.
Key Opportunities Ahead:
- Staking-enabled Ethereum ETFs: Unlike the U.S., Hong Kong may allow ETF holders to earn staking rewards—creating a “digital Treasury bond” product.
- RWA/STO for retail investors: Tokenized real-world assets could let crypto-native investors diversify into traditional markets without leaving Web3.
- HKD-backed stablecoins: A local fiat-pegged digital currency could boost retail adoption.
- Money-changing kiosk licenses: Proposed regulations may enable broader retail access to crypto services.
👉 Explore how staking innovations could redefine yield generation in digital finance.
Hong Kong’s Unique Regulatory Edge
Q: How does Hong Kong’s approach differ from markets like the U.S.?
“Hong Kong practices native regulation—clear rules built specifically for crypto,” Weng explains. “The U.S. uses extended regulation, applying old securities laws to new tech.”
This clarity gives Hong Kong an advantage in speed and predictability. For instance, its early approval of Ethereum ETFs may have pressured U.S. regulators to act faster.
For applicants, success hinges on understanding Hong Kong’s institutional market DNA.
“You can’t treat this like a retail-driven crypto hub,” Weng warns. “Focus on compliance depth, risk controls, and integration with traditional finance—not just listing meme coins.”
HashKey’s Journey: From First-Mover to Market Leader
As one of the first fully licensed exchanges, HashKey has seen tangible growth:
- 40% MoM increase in app activations post-June
- Over HK$45 billion in cumulative trading volume
- User assets exceeding $500 million
- Ranked #1 licensed exchange in Hong Kong (as of July 4 on CoinGecko)
But Weng sees bigger opportunities ahead—not just trading volume, but systemic integration.
“We’re not just building an exchange. We’re helping rebuild Hong Kong’s financial relevance through Web3.”
With staking ETFs, RWA adoption, and deeper broker partnerships on the horizon, compliant platforms like HashKey are laying the foundation for a new era of finance.
👉 See how compliant infrastructure is shaping the next chapter of digital asset evolution.
Frequently Asked Questions
Q: How many licensed crypto exchanges are currently operating in Hong Kong?
A: As of now, only two platforms—HashKey Exchange and OSL Exchange—hold full VATP licenses issued by the SFC.
Q: Can unlicensed platforms still operate in Hong Kong after June 1?
A: No. After June 1, all platforms must be licensed or deemed-to-be-licensed to legally serve Hong Kong users. Some unlicensed operators continue informally, but they operate outside regulatory compliance.
Q: What is a ‘deemed-to-be-licensed’ platform?
A: These are platforms that applied during the transition period and meet interim requirements. They can continue operating temporarily while their full application is reviewed.
Q: Are Hong Kong’s crypto ETFs backed by physical assets?
A: Yes. Hong Kong’s Bitcoin and Ethereum spot ETFs are physically backed, meaning they hold actual BTC and ETH reserves—similar to U.S.-listed ETFs.
Q: Could Hong Kong introduce staking rewards for ETF investors?
A: It’s possible. Regulators have not ruled it out, and industry leaders like HashKey view staking-enabled ETFs as a potential differentiator against U.S. offerings.
Q: How are traditional brokers integrating with crypto in Hong Kong?
A: Licensed brokers are upgrading their SFC 1-license status and partnering with VATP platforms to offer crypto custody and trading services to their existing client base.
Keywords: Hong Kong Web3, VATP license, HashKey Exchange, crypto ETF Hong Kong, staking ETF, RWA tokenization, institutional crypto adoption