Hong Kong Crypto Exchange OSL Weighs Sale at HK$1 Billion Valuation

Hong Kong’s BC Technology Group is reportedly considering the sale of its cryptocurrency platform OSL, which is one of only two exchanges licensed under the city’s digital-asset rules introduced in June. The company has reportedly explored interest from potential buyers, including industry players and funds, with a suggested valuation of around HK$1 billion (approximately $128 million). Shares of BC Technology experienced a significant decline following this news.

OSL’s platform offers a range of services, including prime brokerage, exchange, and custody for cryptocurrency markets, as well as infrastructure for financial institutions to facilitate virtual-asset trading. While the potential sale is under consideration, it’s uncertain whether the entire business or specific parts of OSL will be divested.

A representative of BC Technology responded to these reports by emphasizing the company’s commitment to transparency and regulation, adding that they do not comment on market rumors.

Hong Kong introduced a digital-asset regulatory framework in June 2023, aiming to establish itself as a hub for the cryptocurrency sector. However, demand for cryptocurrencies has remained weak, with the aftermath of last year’s market downturn and associated bankruptcies continuing to impact the industry. Furthermore, the strict regulatory framework in Hong Kong may result in higher operational costs for cryptocurrency-related businesses.

Additionally, Hong Kong has been dealing with the fallout from the scandal surrounding the unlicensed JPEX exchange, which further damaged the reputation of the digital-asset industry in the region.

BC Technology’s net loss reportedly decreased to HK$95 million in the first half of 2023, compared to over HK$300 million during the same period in the previous year. The company’s interim report highlights that OSL’s digital assets and blockchain platform business are the main source of income for BC Technology. The report also notes a significant drop in digital-asset trading volume on OSL in the first half of 2023 compared to the same period in the previous year.

BC Technology’s market value has more than doubled since hitting a low point in August of the same year, reaching nearly HK$1.7 billion. However, the shares are still down more than 80% from their record high in June 2021, during the cryptocurrency bubble of the pandemic era.

OSL has reportedly withdrawn its application for a digital-asset license in Singapore and is planning to submit a revised application. Some of the company’s clients in Singapore are being transitioned to the exchange in Hong Kong.

In Hong Kong, HashKey Exchange is the only other platform that holds a cryptocurrency license, and the licensing process is expected to become more rigorous following the JPEX scandal, which involved alleged fraud amounting to HK$1.6 billion.