HASHKEY MOVES TO STEP UP ITS GAME
Deal with Telegram’s blockchain will allow users in Asia to exchange Toncoins for cash and vice versa
HashKey Group, operator of one of the 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 applied to users in Asia-Pacific and would see the two organisations work on “new ecosystem projects by providing mentorship, networking opportunities and other incubation activities”, the TON Foundation said yesterday.
The foundation governing TON, which 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 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 compliance as a way to help with know-your-customer rules.
“We do take strategic steps to make sure we follow the compliance requirements,” he said.
Even as the TON Foundation 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 foundation pays for premium real estate in the app, making it the default wallet option in the sidebar.
However, it is still grappling with regulatory issues. To avoid complications, it bars people in jurisdictions such as the United States, the mainland and Hong Kong from using the cryptocurrency function in Telegram.
Telegram is blocked on the mainland, but it became popular in Hong Kong during the 2019 anti-government protests. The app has also become the messenger of choice for cryptocurrency enthusiasts. Despite its security issues, its features like broadcast channels and trading bots are popular in the community.
The TON Foundation is betting on the mini-app ecosystem on Telegram as a means of driving adoption of its blockchain, which Yun said could 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.
The foundation also sees Asia as a natural fit because the markets here 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 firm became the second licensed cryptocurrency exchange operator in the city in 2022, nearly two years after BC Technology Group, which operates the OSL exchange.
During the Web3 Festival organised by HashKey, the company on Monday launched a global cryptocurrency exchange.
On Thursday, Hong Kong’s Securities and Futures Commission upgraded HashKey’s licence to allow it to sell cryptocurrency-related investment products to retail investors. It has already been selling bitcoin and ether on its retail-facing platform that it launched in November.
The firm, known today mostly just in Hong Kong, has been looking to transform itself into a major international player. Chief operating officer Livio Weng said this week HashKey intended to surpass Coinbase in trading volume by 2030. Coinbase, the largest cryptocurrency exchange in the US, currently has around 30 times the 24-hour trading volume of HashKey.
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.