HashKey Group, operator of one of only two licensed cryptocurrency exchanges in Hong Kong, is teaming up with the operator of the blockchain created by Telegram Messenger to give users an on- and off-ramp by exchanging their so-called Toncoins for cash.
The agreement applies to users in the Asia-Pacific region and will see the two organizations work on “new ecosystem projects by providing mentorship, networking opportunities, and other incubation activities”, TON Foundation said in an announcement on Friday.
The foundation governing TON – an acronym that once stood for Telegram Open Network and now means simply The Open Network – was set up after Telegram was forced to abandon the blockchain because of a settlement with the US Securities and Futures Commission in 2020. The separate organisation has continued to develop the blockchain and later integrated it into Telegram through a mini app and business arrangements.
“This is potentially quite massive,” TON Foundation president Steve Yun said. He referenced HashKey’s regulatory compliance as a way to help with know-your-customer (KYC) rules. “We do take strategic steps to make sure we follow the compliance requirements.”
Hong Kong’s HashKey crypto exchange takes aim at Coinbase with global platform
Hong Kong’s HashKey crypto exchange takes aim at Coinbase with global platform
Even as TON has sought to keep itself separate from Telegram, the main utility of its blockchain remains tied to the popular messaging app, which has more than 900 million users globally, according to Yun. While anyone can build mini apps integrating other public blockchains into Telegram, the TON Foundation pays for premium real estate in the app, making it the default wallet option in the sidebar.
However, TON is still grappling with regulatory issues. To avoid complications, it bars people in certain jurisdictions such as the US, China and Hong Kong from using the cryptocurrency function within Telegram.
TON is betting on the mini app ecosystem on Telegram as a means of driving adoption of its blockchain, which Yun said can scale better than most blockchains because of its use of sharding – a means of breaking up a blockchain into different segments.
Greater adoption means more users will be looking for ways to convert their tokens to cash and vice versa. TON also sees Asia as a natural fit because they are already used to the “super app” concept, according to Yun, hence the team-up with HashKey in the region.
“Where in the world do [people] know how to build mini apps as part of a super app? Not many places,” Yun said. “Eastern Europe because VK is popular. [Asia-Pacific] because of Line, Kakao and WeChat.”
The agreement also adds to HashKey’s recent expansion efforts. The Hong Kong-based company became the second licensed crypto exchange operator in the city in 2022, nearly two years after BC Technology Group, which operates the OSL exchange.
The local crypto firm known today mostly just in Hong Kong has been looking to transform itself into a major international player. Livio Weng, the chief operating officer, said this week that HashKey intends to surpass Coinbase in trading volume by 2030. Coinbase, the largest crypto exchange in the US, currently has around 30 times the 24-hour trading volume of HashKey.
Teaming with TON foundation offers it a different avenue to scale than Coinbase, which has seen its fortunes rise with the popularity of bitcoin since its founding 12 years ago. HashKey is just half that age.
If Toncoin becomes popular through its integration with Telegram and its myriad mini apps, as the TON Foundation is betting on, then HashKey could suddenly find itself with millions of potential new users across Asia as it facilitates the default medium of exchange on one of the world’s most popular messenger apps.
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